Australian Industry Group (AiG) Performance of Construction Index for December
- prior was 55.2
- A fall of 4.4 points (55.2 – 50.8 … yep, that’ll do it …)
- The construction PMI is the only Aussie PMI for December in expansion (manufacturing 47.6, services 46.1)
- 3 months in expansion now, but obviously a moderation in the rate of growth with this month’s fall
- AUD little response (it is not an immediate market moving report generally anyway)
- weaker engineering construction activity
- House building remained the strongest performing sector
- The selling prices sub-index moved above 50 points (to 54.9 points) for the first time since October 2010 (sign of strengthening confidence in the sector)
- fewer new contracts during the month
- more project completions, most notably in the engineering construction sector
- House builders reported customer enquiries and buyer confidence remained solid in December, despite some slowing in new orders.
- “Tight credit conditions and a lack of public sector tenders were again cited by many as the main constraints on activity”
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Its summer time in Australia, the Reserve Bank of Australia (RBA) does not meet in January. The next meeting is on February 4, and discussions will be intensely focused on the passing of the post-election bounce in the Australian economy. Its an interesting comment in the AIG PCI report for December that “Tight credit conditions and a lack of public sector tenders were again cited by many as the main constraints on activity”. While the AIG is an industry lobby group and one could well respond ‘they would say that, wouldn’t they?’, its food for thought. With the RBA explicitly wanting a still lower AUD, and evidence building of a lacklustre economy, the case for another rate cut is getting stronger. I expect we’ll start to see more comments to this effect, and more comments about macroprudential tools to address the rise in house prices that may well be a constraint on further cuts.
A picture of the Australian Construction Industry performance. Oh, no, wait… that’s a dog with its head above water. Oh, OK, never mind.
