Construction PMI tanks

Oh dear:

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The national construction industry moved back into negative territory in November, with the seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) dropping 8.0 points to 45.4 points in the month.

 The fall in the Australian PCI® in November to a level below the critical 50 points threshold (that separates expansion from contraction), signalled the industry’s first decline since May 2014.

 This significant loss of momentum was driven by a renewed decline in activity and new orders in November which contributed to a steeper fall in employment and a sharp slowdown in deliveries from suppliers.

 All four sub-sectors in the Australian PCI® experienced weaker activity in November. Despite continued expansion in house building, its rate of increase moderated to its slowest pace since March 2014. Apartment building activity also recorded an easing in growth in response to a second consecutive month of declining new orders. Engineering construction exhibited the weakest conditions, with activity declining at a steeper pace in November. Commercial construction also contracted following four consecutive months of growth.

 Survey respondents attributed this month’s deterioration in conditions to a decline in new tendering opportunities, slow public building activity, project delays and a further winding back in mining related construction work.

 House builders noted a reduction in customer enquiries and sales in November amid competitive market conditions.

That report stinks. Here’s the new orders with a universal sag:

2

And employment reacted fast:

4

Given dwelling construction is pretty much all that’s moving in this economy that is not good news. A spooked consumer?

Full report here.

Houses and Holes
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Comments

  1. Chris, I hold you responsible for getting me hooked on GIFs.It is a shame they do not work on Facebook!

  2. The answer is obvious!
    Push up the price of established dwellings so builders will build more, and then people will not be able to afford more of the new stuff they already can’t afford…..
    You couldn’t make this stuff up.
    The way to increase sales and/or production, of anything, is to lower the price. And lowering the price of debt, isn’t lowering the price of the asset…

    • Which is precisely what Joe Hockey said. (the first bit of your analysis anyway) Not taking into account that houses by and large are affordable with the magic money tree being in the speculative land value.
      So what they meant of course was that we will have a house price inflation boom after mining goes AWOL.
      Oh, and I’ve come across a couple of speculative new built townhouses in my area of interest where the prices have gone from ‘price range $670-700″ (meaning don’t even dare to put in an offer of less than $700k but now asking a fixed price of $665k Looks like the punters are finally not paying $50k more for each iteration of a sale in any one area no more.