The Ai Group/HIA Australian Performance of Construction Index (Australian PCI®) expanded for a fifth consecutive month in October, despite falling by 5.7 points from September’s record high to 53.4.
The construction activity (down 3.0 points to 54.1), new orders (down 4.7 points to 52.5) and deliveries from suppliers (down 1.9 points to 59.0) sub-indexes all reflected the slower pace of growth across the sector.
Across the sub-sectors: house building was again robust, if at a slower rate of growth (down 4.4 points to 57.3); apartment building was broadly unchanged and solid at 60.4 points; and commercial construction expanded for a fourth consecutive month, but at a slower rate (down 6.6 points to 51.8). Engineering construction contracted again, at a slightly steeper rate than September (down 1.9 points to 46.4).
Construction employment expanded for a fourth consecutive month, but eased markedly from September’s nine-year high (down 12.3 points to 50.5).
Pressures on profit margins remain strong: growth in the wages sub-index continued in October (down 4.8 points to 58.6); input costs were broadly unchanged at 72.5 points; and selling prices increased slightly to 51.2 points.
New orders eased:
Employment growth stopped:
We’ve probably got another 6-9 months of reasonable results before the house construction boom really starts to come off. Apartments should keep on keeping on. Engineering will crash.
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.
