The latest Cordell – Housing Industry Association Construction Industry Update and Outlook Report has been released, showing a patchy outlook for the construction industry, with mining-related construction slowing due to deferred projects.

 

The report coincides with the  Australian Industry Group's Australian Performance of Construction Index produced in conjunction with the HIA which shows that August was another month of contraction for the construction industry,.

 

The Cordell – HIA Construction Industry Update and Outlook (CIUO) report provides a snapshot of conditions across Australia’s various construction sectors as well as providing informed views on medium term directions for the industry.

 

“At a time of increased uncertainty regarding the construction investment pipeline, the CIUO Report provides a valuable information source for all states and territories regarding the mining, civil engineering, industrial, commercial, community, and residential flats and units sectors,” said Cordell Information National Marketing Manager, Chris Evans.

 

“The report analyses the construction project chain across new, deferred, and abandoned projects in addition to those that are already underway,” added Chris Evans.

 

“The latest report highlights the disparate conditions in Australia’s construction industry across both sectors and geographical jurisdictions, with mining the unsurprising star of the show,” said HIA Chief Economist, Harley Dale.

 

“What we have is a healthy, but narrowly based, short term construction outlook,” Harley Dale added. “Meanwhile the CIUO report finds that the number and value of deferred mining projects was already increasing sharply in the first half of 2012, prior to the recent scrutiny of the mining-inspired investment boom.”

 

The Australian PCI showed that apartment building was the weakest performing sub-sector in the month – down 10.8 points to 22.1 – offsetting gains from the previous month. Engineering construction remained the strongest of the sub-sectors – although still in decline at 35.7 with respondents citing a slowing in resource sector demand and project delays as affecting activity.

 

Australian Industry Group Director of Public Policy, Peter Burn, said: "The continuing severe slump in residential and commercial construction is a drag on the overall economy. In August a weakening in the engineering construction sector contributed to a further worsening in the sector as a whole. Even though interest rates have fallen recently, the near-term outlook for the construction sector deteriorated with a further fall in new orders. The drop off in new orders was particularly sharp for engineering construction and the apartment sub-sector," Dr Burn said.

 

Housing Industry Association Chief Economist, Harley Dale, said: "Against a backdrop of five weak quarters for new dwelling investment, as confirmed in this week's national accounts, it is concerning that the first two Australian PCI updates for 2012/13 provide no sign of a turnaround. The persistent weakness in the sub-indices for activity and new orders into the new financial year raises question marks as to whether we will see any tangible evidence of improved conditions in the construction industry by the December 2012 quarter. You would hope to be seeing a modest improvement by that quarter, but the odds of sighting that improvement appear to be lengthening," Harley Dale said.

 

Australian PCI Key Findings for August:

  • The latest Australian Industry Group Australian Performance of Construction Index, in conjunction with the Housing Industry Association was down 0.4 points to 32.2 in August (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
  • The Australian PCI has now been in negative territory for 27 consecutive months.
  • The new-orders sub-index fell 5.8 points to 28.8.
  • Across the sub-sectors: house building rose to 31.5, commercial construction increased to 34.0, apartment building dropped sharply to 22.1 and engineering consecution fell to 35.7.
  • Employment continued to contract.
  • The selling-price index was 38.5 in August.
  • Survey respondents cited subdued conditions, a shortage of new tender opportunities, project delays and difficulty securing funding as impacting growth.