The slowdown in construction activity eased in August even as demand for new apartments dropped for a 17th straight month.
The Australian Industry Group/Housing Industry Association Performance of Construction Index released on Friday showed activity rose 5.5 points on July to a seasonally adjusted 44.6.
That’s still well below the 50-point mark separating expansion and contraction, but it marked the slowest rate of decline for five months.
Apartment building was the weakest performing sub-sector, declining for a 17th consecutive month, while house building remained in negative territory for a 13th month in a row.
On a trend basis, the house building sub-index was at 39.8, which improved 1.9 points on July for its slowest rate of decline in seven months, while apartment activity fell by 0.4 to 35.8.
“Some businesses commented that demand had been relatively resilient in the month with an improvement in customer enquiries and new orders,” Ai Group said in a statement.
“However, there was also wide reporting of subdued volumes of new work and the dampening influences on demand from tight lending conditions, oversupplied apartment markets and uncertainty surrounding the economic outlook.”
Official data last week showed the number of building approvals dropped by a surprisingly large 9.7 per cent in July, bucking economist predictions of a flat result to further suggest construction will remain a drag on economic growth for some time.
Approvals for private sector houses fell 3.3 per cent on a seasonally adjusted basis, and the “other dwellings” category that includes apartment blocks and townhouses fell by a dramatic 18.4 per cent.
The PCI survey also showed engineering construction activity fell further into negative territory in August, with the sub-index decreasing by 1.7 points to 45.4 points.