MNI 5 Things: Australia Construction Supported Mainly By Engg

--Apartment Construction Contracts Fastest Rate In 6 Years

--Commercial Construction In Contraction But New Orders Up

--House-Building Slips Into Contraction

By Sophia Rodrigues

     SYDNEY (MNI) - The performance of construction index for August was

published by AI Group/Housing Industry Association on Friday. Below are the five

key observations we made from the survey: 

     --The index remained in expansion in August for 19 straight months but the

pace slowed slightly versus July, down 0.2 point to 51.8 due mainly to decline

in activity and employment, partly offset by rise in new orders.

     --Both input prices and wages fell in August but remained at elevated

levels. Selling prices, on the other hand, fell into contraction (-4.6 points to

46.8), highlighting strong competition among builders to secure work. The gap

between input prices and selling prices shows tight profit margins persist in

the construction industry.

     --New orders rose rose 6.5 points to 56.8, the highest in six months due to

strong growth in engineering orders (+16.5 points to 68.4), thanks to the

upswing in public infrastructure investment. Orders in commercial construction

also rose, up 5.4 points to 55.6, due to pipeline of work in accommodation,

offices, education, industrial buildings and aged care.

     --Engineering construction was the strongest performing area of activity

and the only one in expansion in August. Apartment building was the weakest with

activity contracting at the fastest rate in nearly six years. House-building

slipped into contraction in August as businesses noted tighter lending

conditions and a more cautious approach by prospective buyers. Commercial was

subdued too, though it saw a rise in new orders.

     --Employment fell 1.7 points to 49.1 points but the 12-month average

remained at 54.1 points. Wages rose at a slower rate but continued to suggest

demand for workers is support wage growth.

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

[TOPICS: MALDS$,M$A$$$,M$L$$$,MT$$$$]