Construction sector decline continues

Australia's construction industry remains in decline as weakness in engineering and commercial construction outweighs strength in home building.

The Australian Industry Group/Housing Industry Association Performance of Construction Index rose 0.8 points to 46.7 in May - below the 50 level that separates expansion from contraction.

The index has now been in the red for five straight months.

House building strengthened to 54.4 points in May and apartment building jumped to 64.9.

But commercial construction contracted and engineering construction continued to decline, to 34.8 points, on the back of the mining investment wind down.

"The rebalancing of the construction sector is gathering pace with a further decline in engineering construction in May partially offset by healthy expansions in house and apartment building," Ai Group director of public policy Peter Burn said.

"Commercial construction on the other hand is struggling to sustain momentum after some promising signs earlier in the year."

Housing Industry Association chief economist Harley Dale said there were plenty of positives in the data.

"A contraction in engineering construction is hardly surprising, but commercial construction is very close to expansion mode, house building continues to expand, and apartments posted their best result in seven months," Dr Dale said.

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Construction sector decline continues