Concern grows as construction tumbles

Construction activity took a tumble in November, sparking concerns about the health of the economy.

Construction activity took a tumble in November, sparking further concerns about the health of the economy.

The construction industry contracted for the first time since May, according to figures from the Australian Industry Group and Housing Industry Association on Friday.

The Performance of Construction Index dropped eight points to 45.4 in November - below the 50 level that separates expansion from contraction.

A slowdown in public building activity and demand for housing were also weighing on the industry, with the reduced workload forcing job losses, the report said.

The disappointing report comes after official figures on Wednesday showed a shock slowdown in the Australian economy in the September quarter, sparking debate about whether the cash rate should be slashed to a new record low.

Growth in house and apartment building decelerated in November, amid a decline in new orders, the report said.

But home building will need to re-accelerate in coming months, if it's going to help offset the slowdown in mining construction.

"Perceptions regarding Australia's short-term economic outlook have dampened recently and today's result will hardly buoy the prevailing mood," HIA chief economist Harley Dale said.

"The rate of expansion in detached house and apartment building activity slowed in November.

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Concern grows as construction tumbles