Construction index falls away

Another blow for the increasingly depleted ‘team rebalancing’ this morning with the great white hope of housing construction fizzling in the May AiG Performance of Construction Index:

• The national construction industry continued to exhibit substantial weakness in May, contracting at a rate that was unchanged from April. The recent pick-up in building approvals and housing finance has yet to translate into an improvement in overall levels of activity.
• The seasonally adjusted Australian Industry Group/ Housing Industry Association Australian Performance of Construction Index (Australian PCI®) registered 35.3 in May. This is just 0.1 points above the reading in April and slightly below (2.7 points) the average level of the past three years. The May reading marks the 36th consecutive month that the index has been below the critical 50 points level (that separates expansion from contraction).
• The house building sector weakened for a third consecutive month, with activity recording the sharpest rate of contraction in eight months. In contrast, commercial construction activity declined at a slower pace while rates of contraction in apartment building and engineering construction were unchanged on the previous month.
• Respondents linked the weak state of the industry to subdued demand conditions, citing low levels of new orders, slow public sector building activity and a reduction in mining-related construction work. House builders also noted that caution on the part of prospective buyers had continued to constrain activity in the month.

So, according to the PCI, we appear to be rebalancing away from house building. Activity busted its uptrend with a dizzying plunge:

New orders show there’s more weakness to come:

Including in house building:

Indeed the whole index remains sick:

There’s been a modest recovery in HIA new home sales and in ABS Building Approvals but from very low levels, which may help explain why this index is stuck in the red.

Pci Report May 13 Final