Australia: Construction activity booming - AmpGFX

On Monday, Australia’s AiG construction sector PMI rose to a record high of 60.5 in July (in data back to 2005) which was also at a record high on a 3mth (57.7) and 6mth (54.9) average basis, suggesting that this is not just a flash in the pan, explains Greg Gibbs, Analyst at Amplifying Global FX Capital.

Key Quotes

“The AiG notes that, “the further upturn in industry conditions reflected expanding activity across all four major construction sectors.”

“Government infrastructure spending is starting to influence the data, pushing up the engineering construction sector (+6.9 to 57.5).”

“We noted that non-residential approvals were up 27% 3mth-yoy in June, helping push up the commercial construction sector (+9.8 to 64.3).”

“Stamp duty reductions that came into effect on 1 July in the two largest states (NSW and Victoria) are reported to have led an increase in first home buyer activity.  House building rose 3.4 to 62.4.”

“The weakest sector in the last year has been apartments, with approvals peaking last year.  But the sector recovered in July, up 4.3 to 52.6.”

“The forward looking aspect of the survey was the strongest, with new orders rising 2.7 to 64.6.  The employment component rose strongly 4.8 to 59.0, and the wages component rose 3.7 to 64.6, suggesting the sector will help lift wage growth in coming quarters.”