MNI 5 Things: Australia Construction Remains Supported By Engg

By Sophia Rodrigues

     SYDNEY (MNI) - The performance of construction index for September,

published by AI Group/Housing Industry Association on Friday showed the first

contraction in the overall industry in 20 months.

     Below are the five key observations we made from the survey: 

     --The index fell 2.5 points to 49.3, due mainly to a decline in new orders

and employment. In terms of sub-sectors, house-building contracted the most and

engineering was the only one in expansion.

     --New orders fell 9.7 points to 47.1 and the lowest level in nearly two

years, suggesting a softer outlook for the industry in coming months. The

decline was due to fall in new orders in three of the four sub-sectors.

House-building new orders contracted for the second straight month, down 3.8

points to 41.3. Apartment orders declined in 11 of the past 14 months, down 1.9

points in September to 39.4. Commercial construction new orders dropped 9.0

points to 46.6 to contract after 16 months of expansion. The only bright spot

was engineering construction where new orders remained in expansion at 55.5,

though the latest month saw a decline of 12.9 points.

     --Input prices remained elevated in September, up 0.7 point to 76.1, due to

robust demand for materials, higher energy costs and supplier price hikes

related to strength in commodity prices. Selling prices rose by 3.8 points to

50.6, suggesting businesses are at least partly able to pass on rising input and

wage costs.

     --Employment fell further in September, down 2.2 points to 46.9 points, to

mark second consecutive month of contraction. However, despite the fall in

employment, wages remained elevated and at 60.6 points was only slightly below

12-month average of 63.2 points. 

     --Engineering construction is the only one offering support to the

construction industry with overall activity in this sub-sector in expansion for

18 straight months, and was up 10.7 points to 65.7 in September. The sector is

getting a boost from state government capital works.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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