Construction PMI eases

Advertisement

From the AIG:

Capture The national construction industry expanded for a second consecutive month in September, with a slight easing in the pace of growth from August.

 The seasonally adjusted Australian Industry Group/ Housing Industry Association Australian Performance of Construction Index (Australian PCI®) registered 51.9 points in September. This was above the critical 50 points level (that separates expansion from contraction), and down by 1.9 points on the reading of the previous month, signalling a slower rate of industry growth.

 Across the four sub-sectors in the Australian PCI® , apartment building activity again expanded solidly and at a rate that was the strongest in the past 13 months. House building activity also continued to expand with its rate of growth at an 11-month high in September.

 In contrast, engineering construction activity fell further into negative territory in response to the on-going decline in mining-related investment. The sector’s activity sub-index contracted for a fifteenth consecutive month and at the steepest pace since mid-2014. Commercial construction also declined, although conditions in this sector were close to stabilisation after lifting in August and September saw a further expansion of new orders in this sub-sector.

 Across the construction industry, activity, new orders and employment all lifted in September.

 Despite the slower rate of growth in September, residential builders were generally positive in their assessment of business conditions citing low interest rates and the release of land for new housing developments as key factors supporting activity.

 However, on a broader industry front, respondents to the Australian PCI® pointed to on-going pressures arising from subdued private sector investment, a highly competitive pricing environment and tight margins.

New orders for the bubble are traveling solidly:

7

Employment too with engineering crashing:

8

Nothing unexpected here. The roll over will come some time in H1 next year. Full report.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.