MNI: Australia Construction Expansion Continues, Wages High

--Construction Expands for 10th Straight Month

     SYDNEY (MNI) - Australia's construction industry expanded for the tenth

straight month in November, and at a faster rate than October, as activity rose

strongly in engineering, house-building and commercial construction.

     Data published by the Australian Industry Group/Housing Industry

Association Thursday show the performance of construction index rose by 4.3

points to 57.5, the highest level in four months. 

     The data show the overall construction industry is leading growth in the

economy and could be the key source of a pickup in wage growth. This was

reflected in the wages sub-index, which rose 2.4 points to 62.3 points and

remained around the solid 12-month average of 62.7 points. Businesses said the

investment upturn in transport infrastructure and other public works has led to

strong demand for construction workers and increasing difficulties in filling

various skilled job vacancies. 

     The employment sub-index also rose 2.9 points to 55.3, the seventh straight

month of expansion and the ninth expansion in the last 10 months.

     The data also show cost pressures rising in the construction industry, with

input prices sub-index up to 78.8 points. While the selling prices sub-index

also rose, it still showed margins were under increased pressure. 

     Overall, activity in the commercial construction sector was the highest in

3.5 years while engineering activity rose to the highest in 11.5 years.

House-building activity also rose but the apartment sub-sector remained in

contraction, though overall it indicated dwelling construction is likely to

remain at elevated levels.

     From AI Group/Housing Industry Association Performance of Construction

Index (Australian PCI) for November published Thursday.

                          November  Change from Previous Month

--------------------------------------------------------------

Australian PCI                57.5                        +4.3

Activity - Overall            60.8                        +7.9

Activity - Houses             61.3                        +8.2

Activity - Apartments         47.7                        +0.9

Activity - Commercial         59.8                        +9.7

Activity - Engineering        64.1                        +3.2

New Orders                    56.7                        +3.1

Employment                    55.3                        +2.9

Deliveries                    56.4                        +2.2

Input Prices                  78.8                        +3.8

Wages                         62.3                        +2.4

Selling Prices                59.9                        +6.3

Capacity Utilization (%)      79.2                        +0.2

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

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