Australia’s building industry shrank in October at a slower pace as housing showed signs of recovery following interest-rate reductions, a private gauge showed.
The construction performance index was 35.8 last month compared with 30.9 in September, a survey by the Australian Industry Group and the Housing Industry Association released in Sydney today showed. A reading below 50 represents a contraction, and the gauge has been under that level for 29 months.
Australia’s construction industry is struggling even after the Reserve Bank lowered its benchmark borrowing cost by a total of 1.5 percentage points since Nov. 1 last year. Governor Glenn Stevens indicated signs of improvement when he kept rates unchanged at 3.25 percent yesterday.
Construction “took a turn for the better,” Peter Burn, the Australian Industry Group’s director of public policy, said in a statement. “This was most noticeable in the long-suffering house building sub-sector.”
House building surged 12.5 points to 41, and commercial construction advanced 7.8 points to 37.4, today’s report showed. Construction of apartments edged up 1.6 points to 27.6 while engineering gained 2.4 points to 35.1.
New orders rose 7.7 points to 36.8, while a gauge of employment slid 1 point to 32 last month, it showed.