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Construction slowdown eases: AIG-HIA report

ACTIVITY in Australia's construction sector contracted in December but at a slower pace than during November, according to a report by the Australian Industry Group/Housing Industry Association.

The seasonally adjusted Performance of Construction Index rose 1.7 points to 49.3 points in December from November, just below the 50 that separates expansion from contraction.

Reduced demand for apartment building and a further decline in engineering construction constrained growth in December.

New orders were down for the month but employment expanded in December and supplier deliveries rose on the back of improved conditions in earlier months, according to the report.

"The survey results clearly show that construction industry conditions remain tough overall with many businesses facing on-going difficulties in securing new project work," said Peter Burn, Australian Industry Group’s public policy director.

Stronger growth in house building is encouraging and provides critical support to overall levels of activity, Mr Burn said. But the impact of higher interest rates and the removal of government grants for first-home buyers "will test the durability of the housing recovery over the coming months”, he added.