Aussie construction slows

Business Property

A decline in new orders, steep fall in employment and drop in delivers from suppliers led to the slow down in the building industry. Photo: Tamara Voninski

The Australian Industry Group's Performance of Construction index dropped 2.6 points to 48.2 in January, indicating the building sector is contracting.

A reading below 50 points shows the sector is contracting; above indicates expansion.

It dints hope that the industry was on a rebound after strong growth in house building propelled the broader construction sector into its third consecutive month of expansion in December following several years of decline.

Driving the fall was a decline in new orders (down 6.6 points to 47.7), a steeper fall in employment (45.1) and a continued reduction in deliveries from suppliers (49.0), Ai Group says.

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Ai Group public policy director Peter Burn said the reading casts doubt over possibilities of a recovery in the construction sector.

"Its performance in the next few months will be critical in determining whether there is a consolidation of the gains of late last year or a resumption of the weakness that has characterised the residential and commercial construction slump in the past couple of years," he said.

House building was the strongest sub-sector, at 57.5, but its rate of expansion had moderated in line with slower growth in new orders in January.

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Aussie construction slows