SYDNEY, March 6 (Reuters) - Activity in Australia's construction industry fell to a fresh low in February as a dearth of credit curbed commercial property and apartment building, a survey of 120 firms showed on Friday.
The grim report echoed dire surveys from manufacturing and the service sector this week, suggesting the economy was slipping closer to recession and adding to the case for more cuts in interest rates.
The Australian Industry Group/Housing Industry Association performance of construction index (PCI) fell 4.6 points to 29.5 in February, the lowest reading in the history of the survey and far below the 50.0 level separating expansion from contraction.
Worringly, the survey's measure of employment slid 6.3 points to 31.0, pointing to accelerating job shedding ahead of official labour figures out next week.
'There was no let up for struggling construction firms as the relentless pressures of tight credit conditions and low market confidence continued to hit demand for building projects,' said Tony Pensabene, AIG's associate director, economics and research.
'This was evident in the on-going deterioration in activity across all major construction sectors, as firms faced intensifying competition for contracts and a further narrowing of business opportunities,' he added.
The credit squeeze took an escalating toll on commercial property, with that index sliding 9.6 points in February to a lowly 22.2. Apartment building was not far behind, falling 2.9 points to 23.9.
House building fared just a little better with a reading of 27.6, helped by lower interest rates. The Reserve Bank of Australia (RBA) has cuts its key cash rate by 4 percentage points since September taking it to a record low of 3.25 percent.
The central bank skipped a chance to ease at its monthly policy meeting this week, but a spate of grim data including the first outright contraction in the economy in eight years, has markets pricing in a cut next month.
The overall index of activity dropped 4 points to 25.9, with firms complaining that competition to secure new contracts had intensified, resulting in a high level of unsuccessful tenders and shrinking order books.
The survey's index of new orders edged up 1.3 points, but was still weak at 30.2.
(Reporting by Wayne Cole; Editing by James Thornhill) 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 grim report echoed dire surveys from manufacturing and the service sector this week, suggesting the economy was slipping closer to recession and adding to the case for more cuts in interest rates.
The Australian Industry Group/Housing Industry Association performance of construction index (PCI) fell 4.6 points to 29.5 in February, the lowest reading in the history of the survey and far below the 50.0 level separating expansion from contraction.
Worringly, the survey's measure of employment slid 6.3 points to 31.0, pointing to accelerating job shedding ahead of official labour figures out next week.
'There was no let up for struggling construction firms as the relentless pressures of tight credit conditions and low market confidence continued to hit demand for building projects,' said Tony Pensabene, AIG's associate director, economics and research.
'This was evident in the on-going deterioration in activity across all major construction sectors, as firms faced intensifying competition for contracts and a further narrowing of business opportunities,' he added.
The credit squeeze took an escalating toll on commercial property, with that index sliding 9.6 points in February to a lowly 22.2. Apartment building was not far behind, falling 2.9 points to 23.9.
House building fared just a little better with a reading of 27.6, helped by lower interest rates. The Reserve Bank of Australia (RBA) has cuts its key cash rate by 4 percentage points since September taking it to a record low of 3.25 percent.
The central bank skipped a chance to ease at its monthly policy meeting this week, but a spate of grim data including the first outright contraction in the economy in eight years, has markets pricing in a cut next month.
The overall index of activity dropped 4 points to 25.9, with firms complaining that competition to secure new contracts had intensified, resulting in a high level of unsuccessful tenders and shrinking order books.
The survey's index of new orders edged up 1.3 points, but was still weak at 30.2.
(Reporting by Wayne Cole; Editing by James Thornhill) 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.