Another month of expansion for construction

The coming and going of July saw yet another expansion of the construction sector. 

The Australian Industry Group/Housing Industry Association (HIA) Performance of Construction Index, or Australian PCI, rose 0.8 points to reach a total of 52.6.

While this may seem a modest rise, its significance lies in the fact that it puts the index above the 50-point mark for the second month in a row. Fifty is the point in the index which distinguishes contraction from expansion. 

"A second consecutive expansion in the Australian PCI in July, driven by three of the four sub-sectors, is a tick in the box for the Australian economy as well as the construction industry itself," commented HIA Chief Economist Harley Dale in an August 7 release.

Australian Industry Group Director of Public Policy Peter Burn agreed. 

"The residential and commercial construction sub-sectors are building a head of steam with a welcome strengthening in activity, an upturn in employment, further growth in new orders and more attractive selling prices," he said in the same release.

Three of the four industry sub-sectors - commercial construction, apartment building and house building - recorded growth during the month. Commercial and apartment construction recorded rises of 11.4 and 2.7, respectively, bringing the former to the the highest level its achieved in six and a half years. House building also continued to expand, despite seeing a drop of 3.4 points in the index. There will no doubt be more demand for construction machinery like diggers as a result of these figures.

The only drop recorded among the sub-sectors was in engineering construction, which fell 3.9 points to 47.2. 

This has already been reflected in the building statistics which followed the index's release. New South Wales, for example, is forecast to see a peak of more than 50,300 new dwelling commencements in 2014.