All four sectors in the Australian PCI® recovered strongly in February with the housing activity index surging to a new record high and apartment building turning positive for the first time in three years. Commercial and engineering activity did slow from December’s peaks however, and with new orders for new projects in those two sectors turning negative in February, growth may slow again in the coming months.
Ai Group Head of Policy, Peter Burn, said: "The construction sector continued to recover in February building on the strong rebound that first emerged in October last year. House building activity further accelerated, and the apartment sector lifted firmly into positive territory in the month. Both commercial and engineering construction continued to expand although the pace of increase eased for commercial construction. Employment and activity levels both built on the gains of recent months. While recent data has been encouraging, the immediate outlook is mixed with new orders higher only in the housing segment: they were flat for the apartment building sector, mildly negative for commercial building and sharply lower for engineering construction. With several components of fiscal stimulus winding down, delivery on the increased infrastructure pipeline will become a key swing factor in the continued recovery over the rest of 2021," Dr Burn said.
HIA Economist, Tom Devitt said: "Demand for new housing has been driven to record levels on the back of HomeBuilder, low interest rates and shifts in preferences towards detached housing and regional areas. The end of HomeBuilder's first phase deadline in December caused a spike in new home sales in the final month of 2020. The second phase deadline is similarly likely to push back new home sales until March this year. The work that will have entered the pipeline after this point will support home building activity well beyond HomeBuilder. The weaker outlook for apartments still depends very much on the return of overseas migrants, students and tourists," Mr Devitt said.
Australian PCI® – Key Findings for February:
Seasonally adjusted |
Index this month |
Change from last month |
12 month average |
Seasonally |
Index this month |
Change from last month |
12 month average |
Australian PCI® |
57.4 |
-0.2 |
43.9 |
House building |
75.5 |
10.2 |
49.8 |
Activity |
61.4 |
4.0 |
42.7 |
Apartments |
66.7 |
21.2 |
37.7 |
Employment |
61.7 |
4.7 |
46.0 |
Commercial |
54.5 |
-8.0 |
40.2 |
New Orders |
50.1 |
-8.5 |
42.1 |
Engineering |
52.8 |
-0.5 |
40.0 |
Supplier Deliveries |
56.9 |
0.3 |
46.0 |
||||
Input Prices |
80.2 |
3.8 |
70.4 |
||||
Selling Prices |
66.3 |
6.7 |
45.2 |
||||
Average Wages |
64.4 |
3.3 |
54.2 |
Capacity Utilisation (% - seasonally adjusted) |
77.7 |
-4.7 |
74.1 |
Results above 50 points indicate expansion.
Background: The Ai Group/HIA Australian PCI® is a seasonally adjusted national composite index based on the diffusion indexes for activity, orders/new business, deliveries and employment with varying weights. An Australian PCI® reading above 50 points indicates that construction activity is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline.
Media Enquiries:
Tony Melville (Ai Group) – 0419 190 347
Tom Devitt (HIA Economist) – 0439 514 656