▪ The seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) increased by 4.3 points to 57.5 points in November. This signalled a tenth consecutive month of industry expansion and the highest pace of overall growth in four months (readings above 50.0 points indicate expansion with higher numbers indicating a faster pace of expansion).
▪ The industry’s buoyancy reflected on-going strength in engineering construction and house building activity combined with resurgent conditions in the commercial construction sector.
▪ Engineering construction remained the strongest performing area of construction activity with its rate of expansion at a 11½-year high on the back of rising momentum in the roll-out of large-scale infrastructure projects. House building activity also strengthened due to continuing firm demand and support from a solid backlog of work.
▪ The rate of expansion in commercial construction lifted to its second highest level in almost 3½ years amid an increase in the number of projects entering the work pipeline. In contrast, apartment building activity contracted for a fourth consecutive month in November, albeit at a slightly slower rate.
▪ Australian PCI® data for November showed that overall industry activity accelerated in November to its strongest pace in the survey’s 12-year history. This was associated with stronger expansions in new orders, deliveries from suppliers and employment.
▪ Respondents to the Australian PCI® again linked the rise in engineering construction to major transport infrastructure projects underway, particularly on the eastern seaboard.
▪ House builders continued to be positive in their assessment of business conditions, noting sustained strength in customer demand, including rising first home buyer activity. However, apartment builders cited relatively soft new orders and reduced investor activity.
Apartments cooked. All houses and roads now. Full report.
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.
