Construction PMI stuck in reverse

The AIG PCI is out and:

Despite a ninth consecutive month of expansion in house building, the national construction industry has continued to decline. The seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) registered 46.7 points in May (readings below 50 points indicate contraction). This was an increase of 0.8 points from April, signalling a slightly slower rate of decline for the construction industry as a whole.

• The Australian PCI® has now been below the 50 point level that separates expansion from contraction for five consecutive months. The decline in May was the slowest since February.
• The milder decline in the Australian PCI® in May was due to less pronounced reductions in employment and supplier deliveries. However, underlining the continued weakness in overall industry conditions, activity fell more sharply during the month, as did new orders.
• By sector, house building expanded for a ninth consecutive month, and at a rate that was broadly unchanged from April. Apartment building also continued to expand with the sector’s rate of growth increasing to its highest in seven months. In contrast, further contraction was evident in engineering construction which fell at a steeper rate. Commercial construction again declined, although conditions in this sector moved closer to stabilisation.
• House builders were generally positive this month, noting that customer enquiries and sales had continued to hold firm. Respondents in the non-residential construction sector attributed this month’s weaker activity to a lack of new tendering opportunities, slow public building activity and intense competition for the available work. Engineering construction businesses also noteda further winding back in mining related construction.

All about rebalancing, in other words:

Full report here.