construction sector shrinks for third year - www.thebull.com.au

By AAP | 07.06.2013 09:45 AM

Australia's construction sector has now spent three full years in decline, and there are few signs the beleaguered industry's fortunes will change any time soon.

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI) shows the sector contracted for the 36th consecutive month in May.

Ai Group director of public policy Peter Burn said housing and commercial construction remained weak while the sector was also suffering due to declining mining investment.

He said low interest rate cuts had not revived the sector.

"Successive cuts in interest rates by the Reserve Bank have been welcome, but, so far, they appear only to have steadied the decline in building activity," he said.

The Reserve Bank of Australia cut the cash rate to a record low of 2.75 per cent in May.

Housing Industry Association chief economist Harley Dale said there was no sign a sustainable recovery was on its way for the sector.

"The balance of risks points to a modest increase in building activity in 2012/13, followed by a subsequent pull-back next year," he said.

"That's hardly the desirable result for the tens of thousands of businesses and hundreds of thousands of people who rely on new home building for their livelihood."

The PCI rose 0.1 points to an index level of 35.3 in May.

An index reading of below 50 indicates a contraction in the sector and the lower the reading, the greater the speed of the decline in the month.

Source: http://www.thebull.com.au/articles/a/38295-construction-sector-shrinks-for-third-year.html

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