Australian housing construction shrinks as Omicron hits

The latest Australian PCI measure contracted by 11.1 points to 45.9, showing a big reversal from November’s recovery. More here:

Australian PCI® – Key Findings for December 2021 and January 2022:

• The activity indexes for three of the four sectors in the Australian PCI® were well under 50 points in December and January (seasonally adjusted), with the largest drops in the apartments (down 34.9 points to 21.4) and commercial building (down 29.3 points to 39.5) activity indexes. House building slipped further into contraction (down 6.6 points to 40.0) while engineering construction activity also fell sharply but remained relatively neutral (down 16.7 points to 50.0).
• The indexes for activity (down 18.9 points to 41.1), new orders (down 10.8 points to 47.7) and supplier deliveries (down 10.4 points to 34.4) dropped steeply and contracted in December 2021 and January 2022. Queensland was the only state to report activity growth across the period.
• The index for input prices moderated (down 1.5 points to 96.0) in December and January as demand for building materials and house-building supplies remained strong. The selling prices index rose further (up 3.4 points to 81.4) and has been elevated for the past year, indicating builders continue to pass on their cost increases.
• The average wages index nudged up 2.7 points to 76.0 while the employment index eased but remained expansionary (down 2.5 points to 56.5), marking 16 months of employment growth and recovery from the lows of 2020. Capacity utilisation decelerated but remained elevated at 82.3% of available capacity being utilised across the construction industry.