Construction sector resurgence should create jobs


A closely-watched measure shows the construction sector is continuing its resurgence, with commercial building in its healthiest state in more than six years.

The Australian Industry Group (Ai Group) - Housing Industry Association (HIA) Performance of Construction Index rose 0.8 points to 52.6 in the July figures.

It was the second consecutive month that the index has been above the 50-point level that separates expansion from contraction.

The index is now at its highest level since the 55.2 points it reached in November last year.

Commercial construction was the standout sub-sector, jumping 11.4 points to 61.2.

The result was the best for commercial construction since early 2008.

House building weakened 3.4 points to 53.2, but that reading still indicates expansion.

Apartment construction rose 2.7 points to 51.9.

The only major downside in the latest results is the deterioration for engineering construction, with its index reading dropping 3.9 points into the contraction zone at 47.2.

Ai Group director of public policy Peter Burn says the slowdown in engineering projects reflects fading investment in mining-related work.

"With fewer resources committed to expanding the mining sector, there is plenty of engineering construction capacity becoming available to accommodate a lift in infrastructure investment," Dr Burn said.

"The residential and commercial construction sub-sectors are building a head of steam with a welcome strengthening in activity, an upturn in employment, further growth in new orders and more attractive selling prices.

"The broadening of growth to include commercial construction is a welcome addition to the mix."

The latest report also contains positive indicators for the months ahead, with new orders expanding.

Commenting before today's dire official labour force figures showed the unemployment rate has jumped to 6.4 per cent, HIA chief economist Harley Dale said the sector's strength was good news for job seekers.

"Labour market outcomes as well as economic growth will be assisted in 2014-15 by Australia's construction industry, led by what is already a strong recovery in new home building activity," Dr Dale said.

The Ai Group-HIA index's reading of employment in the sector rose 3.9 points to 51.3 in July, indicating that the industry is taking on more staff.