The Australian Industry Group (AiG) Housing Industry Association (HIA) Performance of Construction Index (PCI) for September has just been released.
In what is a rare bright spot for Australian data, the index increased 4.1 points to 59.1 which the AiG says is the “industry’s strongest pace of expansion in the nine years since the survey’s inception.”
In a sign of where the economic transition is at, three of the four sub-sectors expanded. House building printed a solid 61.7, apartment building was also strong at 60.5 points, while growth in commercial construction rose 3 points to 58.4. The only sector contracting was engineering construction, although it did rise 4.6 points to 48.3.
The key here is that new orders and construction activity remain strong, which means that September saw “the highest rates of increase in the survey’s history of both employment (up 9.1 points to 62.8) and supplier deliveries (up 10.8 points to 60.9)”.
That is the economic transition at work.
HIA chief economist, Harley Dale was upbeat about the outcome, saying that the PCI is “among a string of indicators signalling that the strong performance of the new residential construction sector should continue throughout 2014/15.
“The commercial construction sector finally appears to be following the lead of new residential construction, which is another pleasing outcome. It will be important for the broader economy that evidence of strong performance in residential and improving performance in commercial construction presents itself throughout 2014 and into next year.”
The RBA will be pleased.