Peter Burn, Chief Policy Advisor at the national employer association Ai Group said: "Construction activity in Australia contracted further in July following the more moderate contraction in June. Across the industry, commercial construction, house building and engineering construction all reported falls in activity. Apartment activity was stable following a steep fall in June. The construction sector experienced falling orders with the housing sector weighing most heavily. Respondents reported that higher interest rates and the expectation of further rises were the major factors behind the reduction in orders. Lower new demand was matched with ongoing supply-side constraints as businesses face difficulties filling positions, people away with illness and delays in supplier deliveries. Employment was higher in July and selling prices were higher as builders recovered some of their higher costs in the market," Dr Burn said.
HIA Economist, Thomas Devitt, said: "Confidence in the housing sector has been adversely impacted by rising rates which will compound the rise in the cost of construction. This has not yet materialised in slowing sales or approvals of new homes and there is still a large volume of building work in the pipeline to complete. Recent declines in confidence, as shown in this month's Australian PCI®, reflect an anticipation on the part of builders of less new work entering the pipeline in coming months as the RBA's current tightening cycle will, inevitably, bring an end to the boom," Mr Devitt said.
Australian PCI® – Key Findings for July 2022:
|
Seasonally adjusted |
Index this month |
Change from last month |
12 month average |
Seasonally Adjusted |
Index this month |
Change from last month |
12 month average |
|
Australian PCI® |
45.3 |
-0.9 |
50.5 |
House building |
34.6 |
-4.6 |
44.8 |
|
Activity |
42.7 |
-3.5 |
49.5 |
Apartments |
50.0 |
8.3 |
45.3 |
|
Employment |
53.0 |
2.2 |
56.1 |
Commercial |
42.9 |
4.4 |
49.3 |
|
New Orders |
43.1 |
-2.7 |
51.7 |
Engineering |
45.8 |
-11.3 |
54.5 |
|
Supplier Deliveries |
42.2 |
3.2 |
40.8 |
||||
|
Input Prices |
93.8 |
-2.2 |
95.2 |
||||
|
Selling Prices |
87.1 |
4.4 |
80.9 |
||||
|
Average Wages |
76.4 |
-7.3 |
76.1 |
Capacity Utilisation (% - seasonally adjusted) |
80.6 |
-1.8 |
83.3 |
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.
NOW AVAILABLE:
All 2022 release dates for Australian PCI®
Media Enquiries
Tony Melville (Ai Group) – 0419 190 347
Tom Devitt (HIA Economist) – 0439 514 656
