Australia construction industry is going highest ever in 9 years


The construction activities in Australia are moving at a greatest pace in nine years in September led by a boom in housing and a recovery in commercial building, according to a survey out recently.

The overall index of construction activity leaped to 4.1 points to 59.1 in September, yet further above the 50 threshold, that separates growth from contraction, the report by the Australia Industry Group and Australian Housing Association showed.

This led to the highest rates of increase in service sector and releases from suppliers since the survey began in September 2005, AIG said.

Peter Burn, AIG director of public policy said: “Continuing strength in house and apartment building and a consolidation of improved conditions in commercial construction outshone a further, modest contraction in engineering construction,” He further said: “In positive signs for the remainder of the year, new orders were strong in the three expanding sub-sectors and employment grew very solidly.”

The positive review would be welcome news to the Reserve Bank of Australia (RBA), which has been counting on a revitalization of non-resources investment to help counterbalancing the cooling mining sector.

Australia construction industry is going highest ever in 9 years

The central bank holds its October policy meeting said that they are widely expecting to keep rates at record lows of 2.5 percent as the economy clashes with the drag from mining and falling export prices.

Historically low credit rates have clearly worked to revive the housing market with the survey's measure of house building up 0.8 points at a very high 61.7.

The measure for the volatile apartment sector dipped 4.4 points in the month, but was still strong at 60.5. The commercial sector extended its recovery with that index up 3 points to 58.4, while engineering bounced 4.6 points to 48.3.

Receptively for the labour market, the survey's measure of service surged 9.1 points to 62.8, the highest on record. The construction sector is a big employer and the strength bodes well for the official service report.

An increase in the supply of new homes should also help to temper quick increase in house prices; something the RBA has been more and more concerned about among escalating insist for investment properties.