by Chris Becker

The latest Construction Index figures from the AIG are out, with the July reading lifting by 1.4 points to 52 even, the 18th month in a row of expansion, but the trend is still down:

More findings here:

▪ Australian PCI® data for July indicated a marginal improvement in the new orders index which lifted into mild positive territory (i.e. above 50 points) after contracting for the first time in six months in June. In addition, deliveries from suppliers increased at their highest rate in 10 months.

▪ The activity sub-index remained in expansion in July, although growth was modest and slower than in June, while a slight upturn was recorded in employment.

▪ Across the four sub-sectors in the Australian PCI®, engineering construction was the strongest performing area of activity consistent with reports of new tender wins and ongoing support from a strong and expanding pipeline of publicly funded investment in major infrastructure projects.

▪ House building activity remained in positive territory in July, although the implied rate of growth was marginal and largely unchanged from June. However, a lift in new orders growth in July is likely to support stronger housing activity in coming months.

▪ Apartment building was again the weakest performing sub-sector in July with activity contracting for a fifth consecutive month, and at its sharpest rate in five years.

▪ Commercial construction was also more subdued in July, falling into slight negative territory after 14 consecutive months of growth.

▪ House building respondents to the Australian PCI® continued to indicate support from a solid backlog of work and resilient new orders. However, it was also noted by some businesses that tighter lending conditions were having a constraining influence on the housing market.

▪ Apartment builders commented on a lower level of activity largely in response to project completions and softer investor demand

Construction Index grows but apartments sharply decline