Australia’s building industry contracted in November for a sixth straight month, a sign the central bank’s interest-rate increases are restricting demand for new dwellings.
The construction performance index fell 1.8 points to 42.2, according to a survey by the Australian Industry Group and Housing Industry Association released in Sydney today. A reading below 50 indicates the industry is shrinking.
The Reserve Bank of Australia, which raised rates last month to 4.75 percent, will probably keep borrowing costs unchanged in an announcement scheduled for 2:30 p.m. today, a Bloomberg survey of 25 economists showed. Citigroup Inc. said the economy likely won’t reach the bank’s forecast 3.5 percent growth in 2010 after a report last week showed it expanded in the third quarter at the slowest pace in almost two years.
“The continuing weakness in the construction industry reinforces other reports about the patchiness of economic activity in the face of higher interest rates,” Peter Burn, director of public policy at the Australian Industry Group, said in a statement. “Weakness continues across the construction sector but is particularly evident in the residential housing and apartment sub-sectors.”
A gauge of engineering work rose 1.9 points to 39.4 in November and commercial work fell 8.4 points to 38, today’s report showed. House building dropped 9.9 points to 38. The measure of new orders declined 2.7 points to 39.7, the report showed.