Construction PMI rebounds

The third AIG PMI is out:

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) lifted by 5.4 points to 53.1 points in February (readings above 50 points indicate expansion). This was the highest reading for the Australian PCI® since mid-2016 and follows four consecutive months of declines.

 Australian PCI® data for February revealed a solid improvement in the activity sub-index which expanded (i.e. above 50 points) at its highest rate in almost 2½ years. In addition, businesses increased their workforces, with employment rising for the first time in four months.

 Conditions in February were also supported by an increase in deliveries from suppliers and an upturn in the new orders sub-index which returned to growth after six months of contraction.

 Across the four sub-sectors of the construction industry in the Australian PCI, house building recorded a strong resurgence in February with activity expanding at its highest rate since June 2016.

 Stronger conditions were also evident in commercial and engineering construction with activity in both sectors lifting into positive territory after declines over the previous five and four months, respectively. In contrast, apartment building activity contracted for a sixth consecutive month.

 Survey respondents to the Australian PCI® attributed this month’s pick-up to an improvement in demand conditions, citing stronger new orders and an increase in new tendering opportunities.

 House building respondents to the Australian PCI® commented on an increase in customer enquiries in February and a high degree of support from on-going projects. Investor interest in the housing market was also generally seen to have remained solid in February.

 The rise in engineering construction was attributed by some businesses to an improving inflow of infrastructure works, particularly road and rail projects in the eastern states.

I have very little faith in this index. Full report.