Performance of Construction Index (credibility) falls

The AIG’s Performance of Construction Index (PCI) is out today and shows more trouble:

• The Australian Industry Group Performance of Construction Index (Australian PCI®) in conjunction with the Housing Industry Association registered 34.9 in April. This was 1.3 points below the reading in March to indicate a steeper rate of decline. The index has now remained below the critical 50 point level separating expansion from contraction for 23 consecutive months.
• Underlying the overall contraction was a sharp month-on-month decrease in apartment building activity. The commercial construction and house building sectors remained particularly subdued, although the pace of decline in housing activity eased slightly in the month. The slowest rate of contraction was in the engineering construction sector where activity was supported by the strength of resource-related projects.
• Most businesses linked the on-going decline in activity to subdued levels of incoming work and a shortage of new tender opportunities. Businesses also cited the difficulties in securing credit or other funding for construction work, project delays and weak consumer confidence as key dampening influences on activity.

I don’t usually follow this index for the reason that it’s been SO wrong. Construction has been the perhaps the single greatest beneficiary of mining-led growth, according to the national accounts and other more trusted measures. This is despite the big slow down in housing and east coast commercial building

Here is the problem so far as I’m concerned. This is the new orders chart, check out the yellow engineering line:

Yet, here’s what engineering work done looks like from the ABS:

I mean, come on. This index needs recalibration.
Pci Report April 2012 Final