Posted on 11 Aug 2008
The Australian Industry Groupa€“Housing Industry Association
Performance of Construction Index (PCI) decreased to 41.6 points in July, up
slightly from Junea€?s 30-month low of 40.3 points but still well below the
50-point mark that separates growth from contraction.
a€?New home building starts will fall in 2008, marking an
unprecedented fifth consecutive year of weakness,a€? said HIA chief economist
Harley Dale.
a€?An aggravation of the chronic shortage of housing stock
will place further pressure on already exceedingly tight rental markets.a€?
The 120 companies surveyed said high interest rates and
tight credit conditions, which have led to heightened risk aversion and low
consumer and investor confidence, were to blame for the continued weakness in
activity.
Ai Group chief economist Tony Pensabene said activity in the
sector remained weak.
a€?Building activity, construction activity has been hit quite
hard by interest rates and the slowdown in demand in the community,a€? he said.
a€?Housing apartment activity is really at very low levels and
similarly in the commercial construction sector, they are down on previous
months.a€?
The construction index has been languishing below 50 points
since March, the same month the Reserve Bank increased rates to a 12-year high
of 7.25%.
The apartment building sub-index fell by 8.7 index points to
28.5 points, the most subdued level of housing activity in the past 20 months,
while employment in the construction sector dropped by 1.7 points to 43.2, the
fourth straight month of contraction.
