Construction activity falls for 28th month

5 Oct 2012, 10:36 am   -   Source: AAP

Australian construction activity has contracted for a 28 straight month, reporting its sharpest fall for 12 months in September.

Construction activity in Australia fell by its sharpest rate in 12 months during September, an industry study shows.

The Australian Industry Group performance of construction index (PCI), released on Friday, fell to 30.9 in September, from 32.2 the month before.

A reading of less than 50 points indicates contraction.

The sector has been contracting for 28 straight months, with steep declines in activity, employment and deliveries highlighting its weakness.

All major subsectors reported falls in September, with apartment and house building the weakest performers, at 26.0 and 28.5 points respectively.

New orders rose by 1.0 point to 29.1 points - but still showed a 28th month of contraction.

Australian Industry Group chief economist Julie Toth said the overwhelming trend for Australian construction was one of weakness.

"The capital intensive activity under way at present in mining related engineering construction work in some states is simply not filling the gap left by the severe national downturn in residential and commercial construction," she said.

"This is particularly apparent in the new orders and employment measures, which are yet to show a meaningful turning point but which should hopefully be supported by this week's welcome rate cut decision."

The weak PCI result for September appeared to be in line with recent building approvals figures released by the Australian Bureau of Statistics, Ms Toth said.

"This cyclical downturn in building activity is having major knock-on effects for other industries, up and down the construction and housing supply chains," she said.

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