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Housing construction industry crumbles

Australia’s construction industry continues to contract, with September marking the fourth consecutive month that construction activity has fallen.

Construction IndustryConstruction in Australia continues to crumble in all sub-sectors according to the Australian Industry Group Australian Performance of Construction Index (Australian PCI) in conjunction with the Housing Industry Association. The Australian PCI fell 2.4 points in September to 40.8 (seasonally adjusted) remaining well below the critical 50 point level separating expansion from contraction.

Australian Industry Group Director Public Policy, Dr Peter Burn, blames the collapse of the construction industry on the failure of private sector spending to take up the slack after the Federal Government stimulus has been withdrawn.

“As September’s Australian PCI demonstrates, construction companies continue to be plagued by weak market demand and on-going delays in project starts as private demand struggles to fill the gap left by the drying up of projects funded by fiscal stimulus measures.

Dr Burn applauded the Reserve Bank of Australia’s decision on Tuesday to keep official interest rates at 4.5 percent.

“The weakness across the construction industry in September and the discouraging near-term outlook reflected in low levels of new orders provides further evidence that the decision of the Reserve Bank not to raise interest rates was appropriate. Higher interest rates would be a further set back for the industry
which is already suffering from a lack of demand and is trimming its labour force accordingly,” Dr Burn said.

Housing Industry Association Senior Economist, Andrew Harvey, said the Australian PCI housing sub-index is at its lowest point for more than a year and a half.

“The fourth consecutive monthly fall in the house building sub-index of the Australian PCI is further evidence that the outlook for the Australian housing industry is not a positive one.”

“It is hard to see how Australia can overcome the current housing shortage situation in order to help meet the challenge of housing Australia’s growing population.” he said.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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