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Construction index shows slowdown

Adeline Teoh
October 10, 2011

Construction activity in Australia has taken a hiatus, according to a report issued by the Housing Industry Association, part of the Australian Industry Group.

The report says low consumer and investor confidence are responsible for the fall of 2.1 index points to 30 points, where points below 50 indicates a contraction. The decline, for the month of September, is the 16th consecutive monthly fall in activity.

Construction activity is now at its lowest level since February 2009 with all four sub-sectors—houses, apartments, commercial property and engineering—in contraction.

Although the Reserve Bank has kept the interest rate steady at 4.75 percent for several months, Australian Industry Group director of public policy Dr Peter Burn said a rate cut could encourage the industry.

“Lower interest rates would assist in re-igniting demand for housing and commercial construction in particular,” he said. “However, the extent of uncertainty hanging over the domestic and global economy points to a continuation of tough times for the industry.”

Engineering provides a slim hope, with that sub-sector contracting at a slower rate than property, however Burn did not believe a recovery was imminent due to overall weakness.

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Adeline Teoh
Adeline Teoh is the editor and publisher of ProjectManager.com.au. She has more than a decade of publishing experience in the fields of business and education, and has specialised in writing about project management since 2007.
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