AiG: Australia's Construction Sector Is Contracting Again

The Australian Industry Group/Housing Industry Association Performance of Construction index released this morning showed that the construction sector has slipped further into the contraction zone in January with a fall of 2.6 points to 48.2.

The result was driven by a fall in the pipeline of new orders which tanked 6.6 points to 47.7, pushing employment down to 45.1, which is a poor result.

This is bad news for an economy that needs construction jobs to offset the fall in mining investment projects around the nation as part of the transition and rebalancing that the RBA is looking for.

AiG Group Director Public Policy, Peter Burn summed up the situation nice when he said:

January’s drop in the Australian PCI casts a shadow over the signs of recovery in the sector evident in the last few months of 2013. Its performance in the next few months will be critical in determining whether there is a consolidation of the gains of late last year or a resumption of the weakness that has characterised the residential and commercial construction slump in the past couple of years.

The RBA and the market will be watching closely.

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