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Australian construction sector contracts again in December

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World Cement,

The Australian construction sector declined for a third consecutive month in December, according to the Australian Performance of Construction Index (PCI), which remained unchanged in December at 47 points.

Readings under 50 indicate a contraction in activity. The Australian PCI is put together by the Ai Group and the Australian Housing Industry Association.

“The construction sector closed out 2016 with a third straight month of contracting conditions,” said Ai Group Head of Policy, Peter Burn. “Activity, new orders and employments were all down on the previous month and activity in each of the four sectors shrank in December.”

The Australian PCI measures activity across four sectors: apartments, housing, engineering and commercial. Engineering was the best performing sector in December at 48.8 – a rise of 7.8 on the previous month, regaining some stability. Housing was the worst performing sector at 45.6, underperforming its 12-month average of 48.9.

“The engineering construction sector continues to be dominated by the drop in mining-related activity, which is overshadowing a lift in transportation infrastructure in the southeast corner of the country,” continued Burn.

Commercial construction activity suffered its fourth consecutive month of contraction with a score of 47.8, as public sector investment remained constrained and poor investor sentiment weighed on overall commercial property conditions.

In addition, the sector suffered an increase in input prices with the Australian PCI input prices sub-index rising to 70.9 in December, an increase on 5.7 points on November. As a result, profit margins at Australian construction firms remain under pressure.

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