November 2019 - OVERVIEW
Construction drops again in November, but housing activity stabilises
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) registered 40.0 points (seasonally adjusted) in November. This was down by 3.9 points from the previous month, indicating that the construction industry on aggregate declined more sharply in November.
November was the 15th consecutive month of contraction in the Australian PCI® with aggregate industry activity remaining firmly entrenched in negative territory and overall new orders falling more sharply. This on-going weakness in business conditions was associated with a steeper fall in employment and a continued reduction in deliveries from suppliers.
The Australian PCI® (on a trend basis) showed encouraging signs of a stabilisation in house building activity in November. This is consistent with a slower rate of contraction in housing sector new orders over recent months. However, apartment building continued to exhibit weakness, declining for a 20th consecutive month, albeit at a slightly slower rate. Commercial construction also remained subdued while engineering construction again declined amid on-going reports of slow activity on construction sites, lower investment spending by clients and insufficient progress on planned developments.
Reports from residential building respondents to the Australian PCI® indicated that new home buyer demand was showing some improvement in response to interest rate cuts and an easing in bank lending restrictions. However, some house builders noted that uncertainty surrounding the economic outlook and associated risk aversion remained a brake on housing activity. Concerns were also expressed about the continued pull-back by investors in the apartment market.
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