Some Good News for the Australian Construction Industry

Some Good News for the Australian Construction Industry

The construction industry has received a much-needed boost, with the latest results of a new survey showing the market is at its best point since 2010, over three years.

The update comes at a good time. Construction businesses make up a huge part of the number of business insolvencies every month – owners are forcing margins down even further in order to survive.

The latest Australian Industry Group-Housing Industry Association Performance of Construction Index rose 3.9 points to 47.6 in September.

Although this number is still below the 50-point level separating expansion from contraction, it’s the highest reading since May 2010 – and that’s mostly due to apartment building.

The apartment building index increased 20 points to 57.7 after a shocking 40 consecutive months of decline. The AIG said businesses are now beginning to see more work, and enquiries are on the rise as well.

Harley Dale, chief economist of the Housing Industry Association, said this morning that he believes the result is a reflection of a “post-election lift in confidence”.

“This is a result for September, in that month we saw the NAB business confidence index rise, we saw a sharp lift in the Westpac-based survey of construction – it would appear there’s a bit more confidence in the air,” he says.

“This would have been helped by low interest rates.”

But Dale says it’s important to not let the situation get out of hand – the industry is still in trouble and it’s going to be a while before any major changes are seen.

“It’s all about whether that confidence translates into action,” he says.

The industry still suffers from insolvencies. Last week, one of the most successful construction businesses in the country, behind a $100 million refurbishment of David Jones stores in Melbourne, collapsed into administration.

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