Australian construction activity slumps in Nov
Activity in Australia’s construction industry shrank for a ninth consecutive month in November as collapsing confidence and tightening lending standards strangled the industry, a survey showed on Friday.
The Australian Industry Group/Housing Industry Association performance of construction index (PCI) dropped 4.4 points to 32.0, the second-lowest reading since the survey began in 2005 and far below the 50.0 level separating expansion from contraction.
“There has been a further deterioration in house and apartment construction as tight credit conditions and deteriorating economic sentiment continued to hit demand for building projects,” said Tony Pensabene, AIG Associate Director Economics and Research.
“New orders for the industry as a whole are now at their lowest level in the 38 months since the survey began,” he added. “This indicates that the current weakness in activity is likely to continue during the months ahead.”
That was ominous for the economy as a whole as it was the resilience of business investment that kept growth positive in the third quarter, albeit only marginally. Figures out earlier in the week showed the economy grew just 0.1 percent last quarter, the slowest pace in eight-years. The Reserve Bank of Australia (RBA) was worried enough to slash its cash rate by a bold 100 basis points earlier this week, bringing cuts since September to a massive 3 percentage points.
Housing was again at the centre of the storm, with its sub index dropping to a record low of just 20.3 in November, from an already miserly 22.9 in October and 63.0 a year ago.
Likewise, the measure for apartments sank 6.9 points to 23.8, with developers complaining of a lack of credit.
The index of new orders hit fresh lows at 31.2, pointing to more weakness ahead, while employment dropped off sharply to 29.8. (Reporting by Wayne Cole; Editing by James Thornhill)