Jan 10 (Reuters) - Activity in Australia's construction industry contracted for a seventh straight month in December as home building remained weak, though the engineering sector enjoyed a notable pickup in work, an industry survey showed on Monday.
The survey of over 150 firms by Australia Industry Group and the Housing Industry Association found engineering activity boosted by investment in the mining and resources sector, even as other companies complained of subdued demand and poor weather.
The survey's overall construction index rose 1.6 points in December to 43.8, but remained below the 50.0 threshold between growth and contraction.
The measure of engineering jumped 18.9 points in the month to 58.3, showing growth for the first time in six months. Activity in other sectors continued to contract though at a slower pace.
The volatile measure of apartment building rose 5.7 points to 38.6, while house building gained 1.5 points to 39.5. The index of commercial building firmed 6.2 points to 44.2, so that the overall index of sales increased by 9.3 points to 47.5.
New orders fared less well, with that index down 2.7 points to 37.0. The measure of employment dipped 1.4 points to 46.9, but this has not been a good indicator of jobs growth which outstripped all expectations last year.
The official labour report is due out Thursday and analysts are looking for a solid rise in jobs of around 25,000.
Growth in input prices remained high while firms reported subdued selling prices, pointing to pressure on profit margins amid intense competition.
'Weakness continues across the construction sector but is
particularly evident in the residential housing and apartment
sub-sectors,' said AiG director of public policy Peter Burn. 'Expectations of further interest rate rises are having a significant impact on the sector.'
The Reserve Bank of Australia (RBA) raised its cash rate 25 basis points to 4.75 percent in November and has signalled further gradual moves ahead, though likely not for the next few months.
The weakness in residential building pulled the index of new orders down 2.7 points to 39.7, pointing to more softness ahead.
One chink of light came in the measure of employment which firmed 3.2 points in November to 48.3.
(Reporting by Wayne Cole) Keywords: AUSTRALIA ECONOMY/CONSTRUCTION (Wayne.Cole@thomsonreuters.com; 612 9373 1813; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. 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 survey of over 150 firms by Australia Industry Group and the Housing Industry Association found engineering activity boosted by investment in the mining and resources sector, even as other companies complained of subdued demand and poor weather.
The survey's overall construction index rose 1.6 points in December to 43.8, but remained below the 50.0 threshold between growth and contraction.
The measure of engineering jumped 18.9 points in the month to 58.3, showing growth for the first time in six months. Activity in other sectors continued to contract though at a slower pace.
The volatile measure of apartment building rose 5.7 points to 38.6, while house building gained 1.5 points to 39.5. The index of commercial building firmed 6.2 points to 44.2, so that the overall index of sales increased by 9.3 points to 47.5.
New orders fared less well, with that index down 2.7 points to 37.0. The measure of employment dipped 1.4 points to 46.9, but this has not been a good indicator of jobs growth which outstripped all expectations last year.
The official labour report is due out Thursday and analysts are looking for a solid rise in jobs of around 25,000.
Growth in input prices remained high while firms reported subdued selling prices, pointing to pressure on profit margins amid intense competition.
'Weakness continues across the construction sector but is
particularly evident in the residential housing and apartment
sub-sectors,' said AiG director of public policy Peter Burn. 'Expectations of further interest rate rises are having a significant impact on the sector.'
The Reserve Bank of Australia (RBA) raised its cash rate 25 basis points to 4.75 percent in November and has signalled further gradual moves ahead, though likely not for the next few months.
The weakness in residential building pulled the index of new orders down 2.7 points to 39.7, pointing to more softness ahead.
One chink of light came in the measure of employment which firmed 3.2 points in November to 48.3.
(Reporting by Wayne Cole) Keywords: AUSTRALIA ECONOMY/CONSTRUCTION (Wayne.Cole@thomsonreuters.com; 612 9373 1813; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. 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.