(SYDNEY) Australia's construction industry returned to growth in September as a revival in demand for housing helped end 18 straight months of contraction, an industry survey showed yesterday.
The survey of 200 firms by Australia Industry Group and the Housing Industry Association was published a day after the Australian central bank raised interest rates, the first among G-20 nations to do so as the global financial crisis eases.
It showed activity in housing jumped to its best levels since late 2007, aided by government grants for first-time home buyers.
The survey's main measure of overall construction activity climbed 8.4 points to 50.8, finally putting it back above the 50 threshold between growth and contraction for the first time since February last year.
A number of firms in the house-building sector indicated that the pipeline of work was returning to higher levels, with customer enquiries and order books maintaining growth in response to low interest rates and the government grants.
The sub-index of housing activity jumped 11.9 points to 64.4 in September. There were also large increases in the measures of engineering and commercial property, though apartment building remained pressured by tight credit conditions.
The index for new orders rose 8.5 points to 51.0, auguring well for future growth, while the employment index boded well for labour demand with a 9.2-point increase to 51.8.
HIA senior economist Ben Phillips cautioned about Tuesday's rise in interest rates and the phasing out of government assistance.
'The unwinding of low interest rates and the first home buyers' boost threatens to reverse this welcome trend and ensure any recovery in new home trade-up buyer activity and new investment activity remains in a holding pattern,' he said.
The Reserve Bank of Australia lifted its key cash rate by 25 basis points to 3.25 per cent on Tuesday and heralded more hikes to come. -- Reuters
Source: Business Times, 8 Oct 2009
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