SYDNEY -(Dow Jones)- Australia's construction sector contracted further in December, underscoring the woes building firms face as global growth continues to slide, a performance gauge produced by an industry group published Thursday shows.
The Australian Industry Group-Housing Industry Association Performance of Construction Index fell 1.1 points in December from November to 30.9 points, its 10th consecutive fall.
A reading below 50 points separates contraction from expansion.
All major sectors of the construction industry recorded declines, with house building the worst performing sector, while the rates of decline in engineering and commercial construction quickened.
The outlook for the coming months is just as gloomy, Australian Industry Group Associate Director Economics and Research Tony Pensabene said.
"We are continuing to see conditions deteriorate on a broad industry front. The engineering and commercial construction sectors are being hit hard by the lack of credit availability and a reluctance of clients to commit to new projects."
Indeed, measures taken by the government to bolster new home sales by doubling the first time home buyers' grant has also failed to have any noticeable impact, Pensabene said.
"There are, as yet, no signs emerging from the Australian PCI of a boost to demand for house building, following recent interest rate cuts and changes to the First Home Owners Scheme."
In December, house building contracted for the 11th consecutive month, registering 23.4 points on the subindex, although the pace of decline has softened, as the reading was 3.1 points higher than November.
Offering a glimmer of hope for builders is prospects of further monetary policy easing by the Reserve Bank of Australia and an eventual trickle through effect of the government's fiscal stimulus measures.
Still, any recovery is likely to be slow and protracted, Housing Industry of Australia Assistant Director Industry Policy Ben Phillips said.
"For the detached house market, however, lower interest rates and fiscal stimulus should show up in an emerging recovery, albeit one that is unlikely to be of a large magnitude," Phillips said.
The engineering sub index fell 12.1 points to 26.1 points, its weakest reading since September 2005. Commercial construction recorded its eighth decline in 10 months, falling by 18.4 points to 27.5 points.
-By Enda Curran, Dow Jones Newswires;
61-2-8235-2958; enda.curran@dowjones.com
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Publié le 07 janvier 2009 Copyright © 2009 Dowjones