Construction bounces back in September

Construction picked up last month as engineering construction took a leap ahead and easing pandemic restrictions in NSW allowed more onsite work.

The Ai Group/Housing Industry Association Performance of Construction Index jumped by 14.9 points to 53.3, over the crucial 50-level separating contraction from growth and indicating a return to expansion as activity improved in residential and commercial work.

“The very strong rebound into expansionary territory for engineering construction more than offset further declines in house building and commercial construction with the apartment sector treading water in September,” Ai Group policy head Peter Burn said.

“Input prices and wages continued to rise steeply, as did selling prices. Looking ahead, the further easing of restrictions and the resumption of work put on hold should see more decisive improvement in the sector in the months ahead.”

A lift in site density limits to 100 per cent late last month was part of the reason separate measures of activity, new orders, employment and supplier deliveries rose in NSW, the index, based on survey responses of industry purchasing managers, shows.

Conditions in Victoria were more subdued, especially after a two-week snap shutdown of the industry in response to violent protests outside CFMEU headquarters against vaccine mandates.

Onsite work in the southern state was due to resume on Tuesday, although it was unclear how workers would respond to requirements that they have at least one coronavirus jab to be allowed to return to site. Further disruption could result in activity remaining subdued.

House-building in September remained in a state of contraction, even though the pace of decline picked up 3.2 points to 39.6. Apartment-building jumped 17.9 points to 50, the midpoint between contraction and expansion.

Commercial construction also remained negative, even as that sub-index rose 9.9 points to 41.2.

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