Construction sector contracts further in February; RBA signals further rate cut unlikely: Midday Roundup

The national construction sector has declined in February, according to the latest Australian Industry Group figures.

The Australian Performance of Construction Index (PCI) fell by four points to 44.2 in February, a 50% contraction in performance.

While house building continued to grow alongside commercial construction, a sharp drop in engineering and apartment building is being blamed for the pulling overall constriction figures down. New orders also fell to their lowest levels since July 2013.

In a statement, Ai Group director of public policy Peter Burn said developments in the construction sector reflected the conditions in the broader economy.

“The mining investment boom is fading, as seen in the sharp fall in engineering construction activity and new orders,” he says.

“Even though there is an accumulation of positive signs, other sectors are not filling the void.”

RBA signals further rate cuts unlikely

Reserve Bank of Australia governor Glenn Stevens has signalled the official cash rate is unlikely to see any more cuts, although he’s unsure how long it will stay at its current record low.

Speaking to the House of Representatives Standing Committee on Economics, Stevens said there is likely to be a period of stability.

“I haven’t said how long a period because I don’t know…That’s a bit of a shift on our part, where we had been saying that there might be scope to go down a bit more if needed; I don’t think we do need to, at this point in time,” he says.

“I think if it’s possible for there to be a period of stability, then that in itself at the margins is probably helpful to people.”

Shares up on open

Aussie shares have edged higher this morning, following a positive day on Wall Street.

The S&P/ASX200 benchmark was up by 10.2 points to 5456.1 points at 11:44am AEDT. Overnight the Dow Jones closed 61.71 points up, 0.38% higher at 16,421.89.