Construction still contracting

THE construction sector remained in contraction for the third consecutive month, despite a slight increase in activity in January.

THE construction sector remained in contraction for the third consecutive month, despite a slight increase in activity in January.

The Australian Industry Group and Housing Industry Association’s Performance of Construction Index rose 1.5 points to 45.9 in January from 44.4 in December.

The index remains below 50 points — the level that separates expansion from contraction.

Respondents to the survey said the industry’s weak start to 2015 was due to a further contraction in mining related construction work and unseasonably wet weather conditions. “House builders noted a further easing in customer enquiries and sales,” the report said.

“More positively, there were reports of a lift in demand for commercial development projects.”

All four sub-sectors of the index — houses, apartments, commercial and engineering — contracted in the month.

“Engineering construction continued to exhibit weakness, contracting for a seventh consecutive month,” the report said.

“Commercial construction also declined, but conditions moved close to stabilisation.”

The Reserve Bank of Australia yesterday noted construction activity and prices in the housing market continue to be supported by the very low level of interest rates and strong population growth.