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New figures have revealed that the national construction industry has expanded for the third consecutive month, driven by strong growth in apartment building activity.
According to the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI), the growth is the fastest it has recorded in its 10-year history, with the index climbing by 0.2 points to 52.1 last month, remaining above the 50-point level separating expansion from contraction.
“The strong run of apartment building activity continued in October and commercial construction edged closer to expansion,” Ai Group head of policy Peter Burn said.
“In contrast, house building slipped into negative territory and engineering construction remained in contraction.”
Mr Burn said the higher level of activity in the apartment sub-sector was sufficient to “extend the overall construction sector expansion into a third month”.
“Expectations of further growth in the months ahead will be encouraged by the higher levels of new orders recorded for the apartment, engineering and commercial construction sub-sectors,” he added.
“This is a further sign of the long-awaited broadening of the base of economic growth.”
Meanwhile, HIA chief economist Harley Dale said the Australian PCI results reinforces the important role that residential construction is playing in driving broader economic activity.
“The strong findings for apartments are consistent with the considerable pipeline of activity, while the overall trajectory for detached houses signals healthy construction in 2015/16, albeit off the cyclical peak of last year,” Mr Dale said.
“That is, however, a sharp monthly decline in the house building sub-index and some reversal will hopefully come through in November.
“There are signs emerging of a broadening strength to the construction industry – the results for the commercial and engineering construction sectors are encouraging.”
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[Related: Capital growth to be ‘very subdued’ in 2016]
