SYDNEY, Jan 8 (Reuters) - Activity in Australia's construction industry contracted for the 10th straight month in December as clamps on credit stifled new business in commercial and engineering projects, a survey showed on Thursday.
The Australian Industry Group/Housing Industry Association performance of construction index (PCI) dropped 1.1 points to 30.9, the lowest reading since the survey began in 2005 and far below the 50.0 level separating expansion from contraction.
'The results provide little doubt that the construction industry remains under substantial pressure as the economic and financial crisis continues to adversely affect market confidence and demand for building projects,' said Tony Pensabene, AIG's associate director, economics and research.
'Highlighting the weakness in demand, new orders have now fallen for 10 straight months, and with significant declines being recorded across the industry.'
The survey's index of new orders dropped 4.6 points to another record low of 26.6 in December, with the engineering sector suffering a particularly steep slide.
That was ominous for the economy as a whole as it was the resilience of business investment that helped keep growth positive for much of last year.
The results echo dismal surveys of manufacturing and services for December and will only reinforce expectations for more cuts in interest rates.
The Reserve Bank of Australia (RBA) has already slashed its cash rate by 3 percentage points to 4.25 percent and investors are pricing in a further easing toward 3 percent.
The survey's measure of engineering activity took a dive to 26.1 in December from 38.2 in November, while commercial property sank 18.9 points to 27.5.
Housing showed a hint of stabilisation albeit at very low levels. The index for house building edged up to 23.4, while that for apartments rose to 29.4.
The measure for employment also picked up to 35.5 from 29.8 in November, but that still pointed to net job losses in the industry.
(Reporting by Wayne Cole; Editing by Jonathan Standing) Keywords: AUSTRALIA ECONOMY/CONSTRUCTION (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The Australian Industry Group/Housing Industry Association performance of construction index (PCI) dropped 1.1 points to 30.9, the lowest reading since the survey began in 2005 and far below the 50.0 level separating expansion from contraction.
'The results provide little doubt that the construction industry remains under substantial pressure as the economic and financial crisis continues to adversely affect market confidence and demand for building projects,' said Tony Pensabene, AIG's associate director, economics and research.
'Highlighting the weakness in demand, new orders have now fallen for 10 straight months, and with significant declines being recorded across the industry.'
The survey's index of new orders dropped 4.6 points to another record low of 26.6 in December, with the engineering sector suffering a particularly steep slide.
That was ominous for the economy as a whole as it was the resilience of business investment that helped keep growth positive for much of last year.
The results echo dismal surveys of manufacturing and services for December and will only reinforce expectations for more cuts in interest rates.
The Reserve Bank of Australia (RBA) has already slashed its cash rate by 3 percentage points to 4.25 percent and investors are pricing in a further easing toward 3 percent.
The survey's measure of engineering activity took a dive to 26.1 in December from 38.2 in November, while commercial property sank 18.9 points to 27.5.
Housing showed a hint of stabilisation albeit at very low levels. The index for house building edged up to 23.4, while that for apartments rose to 29.4.
The measure for employment also picked up to 35.5 from 29.8 in November, but that still pointed to net job losses in the industry.
(Reporting by Wayne Cole; Editing by Jonathan Standing) Keywords: AUSTRALIA ECONOMY/CONSTRUCTION (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.