Australia’s building industry shrank in September by the most in 12 months, led by a deepening downturn in residential and commercial construction, a private gauge showed.
The construction performance index fell to 30.9 last month from 32.2 in August, a survey by the Australian Industry Group and the Housing Industry Association released in Sydney today showed. A reading below 50 represents a contraction.
Australia’s housing industry is struggling even after the Reserve Bank lowered its benchmark borrowing cost by a total of 1.25 percentage points from November to June. Governor Glenn Stevens acknowledged this week when he reduced the key rate by another quarter percentage point to 3.25 percent that a mining boom driving economic growth is likely to peak next year at a lower level than expected.
“The capital-intensive activity under way at present in mining-related engineering construction work in some states is simply not filling the gap left by the severe national downturn in residential and commercial construction,” Julie Toth, AIG chief economist, said in a statement. “This is particularly apparent in the new orders and employment measures, which are yet to show a meaningful turning point but which should hopefully be supported by this week’s welcome rate cut.”
House building fell 3 points to 28.5 and commercial construction dropped 4.4 points to 29.6, today’s report showed. Construction of apartments gained 3.9 points to 26 while engineering slid 3 points to 32.7,
New orders rose 1 point to 29.1, while a gauge of employment fell 2.4 points to 33 last month, it showed.