Aussie building sector contracts again

AUSTRALIA'S building industry has contracted further with a sharp fall in new orders as the investment phase of the mining boom fades.

The contraction in the building sector deepened in February, according to the Australian Industry Group's Performance of Construction index which fell by 4.0 points to 44.2.

A reading below 50 points shows the sector is contracting; the lower the number the faster the contraction. A ready above 50 indicates expansion.

House building continued to expand in February (52.2) and commercial construction experienced strong growth (59.9) but a steep drop in construction linked to the mining industry dragged the entire sector down.

Engineering construction dropped 14.6 points to 39.7 while apartment building contracted for the second month in a row (46.6).

New orders across the industry fell to its lowest reading since July 2013.

This is the second consecutive month of contraction, dashing hopes of a rebound in the industry after strong growth in house building propelled the broader construction sector into its second consecutive month of expansion in December following several years of decline.

Ai Group director Peter Burn said other sectors of the construction industry were not offsetting the decline in mining investment.

"The mining investment boom is fading, as seen in the sharp fall in engineering construction activity and new orders and, even though there is an accumulation of positive signs, other sectors are not filling the void," he said.

"House building remains healthy and should gain greater traction if there is a reasonable conversion of strong building approvals into new activity."

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Aussie building sector contracts again