Australian PCI Shows Highest Reading in A Year

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index, or Australian PCI, jumped to 53.8 points in August 2015. This 6.7 point increase took the index to its highest level since September 2014, when it stood at 59.1 points. Take a closer look at how the PCI grew, and what it means for Australia’s construction industry.

Factors Driving PCI Growth

The Australian PCI’s 53.8 point rating is significant, since any reading above 50 points indicates market expansion. This result was inspired by substantial improvements in the new orders sub-index, which posted growth for the first time in the last five months. The activity sub-index also bounced back after nine months of contraction, and construction sector employment rose. On the downside, supplier deliveries fell for the fifth month in a row. Looking more closely at construction activity, apartment building increased for the fifth time in the last seven months. Gains in this category were the second-largest displayed all year. Residential building was stable during the previous months, but grew in August. Despite drops in the last nine months, commercial construction also posted solid expansion in August, thanks to new tender wins. Only engineering construction remained in negative territory, as it has for the last 14 months, due to declining mining investments.

A Reversal of Fortune

Australia’s recent PCI growth came off the back of less than favourable figures over the last nine months. During this period, the PCI either declined or remained stable, making the recent bounceback even more impressive.

Implications for the Australian Construction Industry

While Australia is still hurting from the mining downturn, strong residential and commercial postings are helping to lift Australia’s construction industry. Contact TPM Builders to learn more about commercial building construction. The strong employment figures that come with a high PCI rating should also afford Australia’s construction workers a sense of job security. It’s uncertain how sustainable current growth is, but Australia’s construction industry will hope that the PCI continues to climb. Image via Flickr by mikecogh