The Australian Industry Group (AIG) has just released the Performance of Construction Index (PCI) for the month of August, which contracted by 0.4 points to 43.7 – well below the 50 point threshold seperating expansion from contraction. It was the 39th consecutive month of contraction, according to the AIG (see next chart).
Looking at the sub-indices, activity rose marginally (up 0.3 points), suggesting a slowing in the rate of decline. Capacity utilisation also rose a little, up 1% to 65% (see next chart).
House building activity remains broadly flat, just below the 50-point threshold, whereas the rate of decline in commercial building also moderated. By contrast, apartment building remains subdued, whereas the engineering construction weakened (see next chart).
New orders contracted again in August, but at a slower pace, as did deliveries of inputs from suppliers (see next chart).
However, all categories except engineering construction showed improvement (see next chart).
Perhaps most concerning, employment contracted at a sharper rate in August, on the back of insufficient workloads and weak levels of incoming business. Wages growth also fell (see next chart).
Finally, the rate of increase in input costs fell slightly in August. By contrast, selling prices fell for the 34th consecutive month, albeit at a lower pace, reflecting highly competitive market conditions (see next chart).
