Australia’s construction industry continues to struggle despite low interest rates, with activity in the sector falling for the 39th consecutive month.
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI) fell 0.4 points to 43.7 in August.
An index reading below 50 indicates activity in the sector is falling and the lower the reading, the greater the speed of the decline.
Although the construction industry is still weak, there are signs of a gradual improvement in business conditions, Ai Group director of public policy Peter Burn said.
“On the positive side, the house building sector remains close to the point of stabilisation, with lower interest rates starting to provide some support to levels of activity and new orders within the sector,” he said.
“However, clearly we need to see much stronger conditions to offset the slack resulting from the winding down in mining related projects and the distinct weakness that persists in commercial and apartment building activity.”
Housing Industry Association chief economist Harley Dale said a recovery in the construction sector is still a long way off “even though super-low interest rates are providing some welcome assistance.”
“Against the backdrop of tight credit conditions for residential and commercial projects and an insufficient focus on policy reform, the necessary goal of achieving healthy levels of non-mining related construction activity will remain elusive,” he said.
Across the sectors of the construction industry, house building activity declined at a broadly unchanged rate, with the its index at 49.0 points.
Commercial construction recorded a slower pace of contraction with an index level of 39.1 points.
Declines in apartment building construction and engineering construction were steeper in August.