Peter Burn, Chief Policy Advisor at the national employer association Ai Group said: "The pull back of the Australian construction sector continued in August with three of the four industry segments recording falls in activity and employment across the industry dropping in the month. Engineering construction was the exception with a strong turnaround in activity recorded in August. Builders and constructors link much of the fall in activity to rises in interest rates in recent months. There was a further fall in new orders in the house building segment in August. However, for the construction industry as a whole, new orders bucked the recent trend and were slightly up on the levels reported in July. Softer demand was also reflected in the steep fall in the selling price index even though input prices and wage increases remain elevated. While respondents reported ongoing difficulties in securing inputs, there are signs these constraints may ease over coming months," Dr Burn said.
HIA Economist, Thomas Devitt, said: "Housing activity continued to contract rapidly in August, consistent with a number of other indicators. The RBA's cash rate increases have brought an end to the housing boom. Climbing borrowing costs are compounding the costs of construction that have surged on the back of land, labour and materials shortages. Fewer people are visiting display villages, sales volumes have dropped, and there is less lending for the purchase of new and existing homes. There is a risk that the enormous pipeline of work still to complete will obscure the impact of rising rates on the broader economy, resulting in unnecessary rate hikes from the RBA," Mr Devitt said.
Australian PCI® – Key Findings for August 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® |
47.9 |
2.6 |
51.3 |
House building |
33.3 |
-1.3 |
44.5 |
|
Activity |
46.2 |
3.5 |
50.6 |
Apartments |
37.5 |
-12.5 |
45.8 |
|
Employment |
47.7 |
-5.3 |
56.0 |
Commercial |
45.8 |
2.9 |
50.8 |
|
New Orders |
51.0 |
7.9 |
52.9 |
Engineering |
59.1 |
13.3 |
56.8 |
|
Supplier Deliveries |
45.6 |
3.4 |
41.6 |
||||
|
Input Prices |
92.6 |
-1.2 |
95.3 |
||||
|
Selling Prices |
68.5 |
-18.6 |
80.8 |
||||
|
Average Wages |
77.6 |
1.2 |
76.9 |
Capacity Utilisation (% - seasonally adjusted) |
82.6 |
2.0 |
83.6 |
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
