Jeez. The data flow is not good for the RBA housing construction plan. The AiG Performance of Construction Index for January is out and the recent up trend stalled:
The downturn in the national construction industry continued in January. Both activity and new orders contracted at steeper rates, unwinding some of the improvement in industry conditions witnessed in late 2012.
The seasonally adjusted Australian Industry Group/ Housing Industry Association Australian Performance of Construction Index (Australian PCI® ) declined by 2.6 points in January to 36.2. The index has now remained below the critical 50 points level (that separates expansion from contraction) for 32 consecutive months.
Reflecting the dampening influence of falling new orders, all major sub-sectors experienced contractions in activity in January. House building was the weakest performing sector (despite a slower pace of decline in activity), while the apartment and commercial construction sectors contracted at steeper rates during the month. Engineering construction declined at a rate that was broadly unchanged from December 2012.
Most businesses linked the ongoing decline in activity to poor market demand, citing limited opportunities to tender for new work and project delays. Difficulties in obtaining finance and weak consumer and investor sentiment had also contributed to a lack of new business.
The new orders measure fell in every category:
Employment tanked:
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But there was one ray of hope. Of the four categories, housing did rise a little in aggregate:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
