Construction posts slower decline

The decline in the construction industry has slowed in October, according to a private survey.

The Australian Performance of Construction Index (PCI) increased 4.7 points to 34.7 points, but still falling well short of the 50-point level that indicates expansion rather than contraction.

Industry sub-sectors posted similar trends, with house building posting its smallest decline in four months (up 9.2 points to 33.3 points), according to the index released by the Australian Industry Group (Ai Group) today.

Engineering construction remained the strongest sub-sector in October, up 2.5 points to 44.1.

Much of this was due to support from resource-based and infrastructure projects.

Also encouraging were the figures for new orders, which rose 8.0 points to 31.9 points, suggesting they may be entering a positive trend.

AI Group director public policy Peter Burn said the figures - as well as the recent interest rate cut by the Reserve Bank of Australia - could create future sector growth.

"The easing of the pace of decline in overall construction activity and the turnaround in the Australian PCI new orders sub-index after a steepening pace of decline over the year to date, is somewhat encouraging," he said.

"While global economic uncertainties persist and domestic confidence is yet to bounce back, the Reserve Bank's decision last week to reduce interest rates could help build the momentum towards recovery in the sector over coming months."

October marked the 17th consecutive month of contraction for the construction industry, according to PCI figures.

However, all sub-sectors (house building, apartment building, commercial construction and engineering construction) reported stronger figures compared to September data.

Apartment building was up 4.6 points to 25.6, and commercial construction grew 5.5 points to 31.3.

Employment in the sector also indicated a slowing decline, up 5.0 points to 37.3.