Construction PMI builds on gains

PMI purple patch:

▪ The national construction industry expanded for a fifth consecutive month in June, although the pace of growth moderated slightly from May’s 32-month high level.

▪ The seasonally adjusted Australian Industry Group/ Housing Industry Association Australian Performance of Construction Index (Australian PCI®) fell by 0.7 points to 56.0 points in June. This signalled a positive but somewhat slower pace of overall industry growth (readings above 50.0 points indicate expansion with higher numbers indicating a stronger rate of expansion).

▪ Across the four sub-sectors in the Australian PCI®, house building rebounded strongly in June, with the sector’s rate of growth reaching a three-month high. However, activity in the more volatile apartment building sector weakened significantly, falling back into negative territory following a solid upturn in May.

▪ The commercial building sector remained on a firm footing in June with activity continuing to expand at a relatively solid rate amid reports of rising project starts. In contrast, activity in the engineering sector stabilised in June following two months of solid growth.

▪ Across the construction industry, activity and deliveries from suppliers both expanded at softer rates in June. The new orders sub-index lifted slightly from the solid level of the previous month to record its fastest pace of expansion in close to 11½ years.

▪ Reports from residential builders were mixed. Respondents to the Australian PCI® were generally positive in their assessment of house building activity, citing stronger new orders and a high degree of support from on-going projects. However, there were reports from apartment builders of softer activity in the month due to the completion of some larger multiunit developments and an easing in demand conditions.

Full report.