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Housing keeps construction growing in March: Australian PCI®

13 April, 2017

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) dropped by 1.9 points to 51.2 in March

It indicates a slower rate of industry growth following February's solid recovery (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase).

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Ai Group Head of Policy, Peter Burn, said: "The continued strength of house building kept the overall construction sector in positive territory in March. With apartment activity trending down from historic highs; with commercial construction patchy at best; and with engineering construction dominated by the wind-down of mining and energy-related projects, growth is relying heavily on the housing sub-sector. And the outlook for the next few months is more of the same with house builders reporting strong growth in new orders whereas for the rest of the sector new orders were down sharply in the month. While the underlying adjustments underway in the construction sector are significant, to date they have been occurring at an orderly pace at an industry-wide level. This is being assisted by additional infrastructure work going on – particularly in the south-eastern corner of the country," Dr Burn said.
HIA Economist, Geordan Murray, said: "After peaking during 2016, the residential building cycle has now entered a new phase, with activity edging back from the all-time high. While overall activity is still currently hovering at a very elevated level, we anticipate that this new phase of the cycle will be characterised by a marked contraction in apartment building, while an easing in detached house building is likely to be far more measured. The contrasting conditions in the detached house and apartment markets are already clearly evident in this update to the Australian PCI®. With the positive contribution from the residential sector waning, if we are to see the Australian PCI® remain in expansionary territory we will need to see a more broad-based recovery in non-residential construction," Murray said.

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