SYDNEY (XFN-ASIA) - Construction activity across Australia rose moderately in December to the highest level since July, following two consecutive months of declines, the Australian Industry Group (AIG) said.
It said the seasonally adjusted AIG/Housing Industry Association performance of construction index in December increased by 4.5 points from November to 52.1, with a level above 50 representing expansion.
AIG said firms mainly linked the improvement to a step-up in activity to meet project deadlines at the end of 2006, as distinct from any significant gains in new business.
The organization said in December both activity and deliveries in the construction sector increased, after posting falls in the previous two months.
It said growth in construction activity was still seen by many as being impeded by higher interest rates, adding that this was reflected in a continued contraction in new orders.
Firms in the house building sector also noted the negative influences on activity of land supply constraints and the high cost of land.
The house building activity sub-index in December rose a seasonally adjusted 8.6 points from November to 48.8.
AIG said engineering construction was the best-performing sector, with firms reporting continued solid levels of work from contracts secured in the resources sector.
The engineering construction sub-index continued to trend higher, although at a slower pace, rising 0.5 points in December to 58.5.
Following a strong upturn in November, expansion in commercial construction moderated in December with the index falling 6.4 points to 55.5.
bruce.hextall@xfn.com