Australian building activity has continued to decline in April: Industry study

Building activity in Australia has continued to decline in April, an industry study has found.

The Australian Industry Group-Housing Industry Association’s performance of construction index (PCI) fell 1.3 points to 34.9 in April.

A reading below 50 indicates a contraction in activity.

The index has been in contraction for 22 months and sectors experienced further falls.

A sharp drop in apartment building activity was the weakest of the four sub-sectors with a reading of 22.9.

House building was reported at 33.3 and commercial construction was at 35.2.

The smallest decline in activity was in engineering construction, at 40.9.

Australian Industry Group (Ai Group) director of public policy Dr Peter Burn said the continuing trend of low activity reflected weak growth in other sectors.

“The fall in construction activity in April is further evidence of the widespread nature of the current slowdown in the broader economy,” Burn said.

“The ongoing weakness in the residential and commercial construction sub-sectors was exacerbated by the slowing in engineering construction activity that has now been in train since the start of the year.”

“Last week’s reduction in interest rates will help counter the existing headwinds while the construction industry will have to keep a close eye on tomorrow’s budget and the impacts it may have on business, households and public sector demand over the year ahead.”

HIA economist Geordan Murray said the Reserve Bank of Australia’s 50 basis points rate cut last week was the first step in supporting the Australian economy.

“Evidence of a persistent weakening in Australia’s residential construction industry is continuing unabated in 2012,” Murray said.

“Federal and state government support and policy reform is a vital plank in restoring confidence and activity in the residential construction industry; interest rate relief can’t do all the heavy lifting.”