The Australian Industry group (AiG) and the Housing Industry Association (HIA) have just released the latest reading for their Performance of Construction Index (PCI) which fell 4.4 points to 50.8, just holding above the 50 demarcation zone between expansion and contraction.
The HIA’s Chief Economist Harley Dale put a positive spin on what was a big pullback saying that the PCI “effectively ‘paused for breath’ in December, easing its rate of growth after a strong march forward over the previous several months. The key is that the index remained in expansionary territory. Four months of such expansion, following as it does years of contraction, is an important tick in the box for Australia’s growth prospects in 2014 given the position of the Australian PCI® as a key leading indicator of Australia’s construction activity. The on-going strength in apartment and house building sub-indices is pleasing to observe. Detached housing, for example, still accounts for over 60 per cent of new home building and has a substantial ‘reach’ into Australia’s manufacturing sector,”
So as alarming as such a big pullback is, the outlook it seems remains positive for housing construction and related sectors in the economy.