Home building grows, but commercial and engineering contract

A private index of construction activity shows residential building rising, while commercial and engineering fell.

The Australian Industry Group - Housing Industry Association Performance of Construction Index (PCI) dipped 0.3 points in April to 45.9 - below the 50-point level that separates expansion and contraction for the fourth consecutive month.

However, the index shows a split between the expanding residential sector and declining commercial and engineering construction sectors.

The PCI's house building sub-index rose 3.8 points to 54.6 points, while apartment building surged 12.3 points to hit 57.9, indicating that both sectors were growing strongly.

In contrast, the commercial slumped 10.8 points to 45.7, indicating a contraction in office, industrial and retail building.

Engineering construction also fell 6.3 points to 39.2, as the end of the mining investment boom begins to bite in earnest.

The Ai Group's head of public policy Peter Burn says the fall in mining engineering is so big it is outweighing the rise in residential building.

"The deepening slide in engineering construction is overshadowing the growth in residential building activity and the tentative recovery of commercial construction as seen in the expansion in April of new commercial construction orders," he noted in the report.

"Against this background, the Commonwealth Budget provides a timely opportunity to boost non-mining infrastructure investment and address business concerns about an excessive withdrawal of public sector demand."

Housing Industry Association economist Diwa Hopkins says the success story of construction is house building, which has improved for the eighth straight month.

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Home building grows, but commercial and engineering contract