Construction booms in July

July was a robust month for the Australian construction industry. Key findings by the Ai Group found the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI) increased by 4.5 points to 60.5 in July, signalling the strongest acceleration of industry growth since the survey's inception in September 2005.

All four construction sub-sectors expanded in July with house building and commercial construction the major drivers of growth.

"The national construction industry has continued its strong run with infrastructure work, a resurgent commercial construction sub-sector and ongoing healthy levels of activity in residential building combining to more than offset the further wind-down of mining-related work," said Ai Group Head of Policy, Peter Burn.

Growth in new orders (up 2.7 points to 64.6) and activity (up 5.2 points to 58.3) accelerated in July, leading to solid expansions in deliveries from suppliers (up 6.4 points to 59.2).

Further, construction employment soared in July with employment growth the highest in almost three years (up 4.8 points to 59.0), with growth in wages at a higher rate than in June.

"The buoyancy of the sector is evident in strong levels of current activity and employment growth and growing order books," said Burn.

"The long-awaited pick-up in commercial construction seen over the past three months is particularly welcome in light of the anticipated wind-down in apartment building from the very high recent levels and suggests that the national construction industry will continue to play a leading role in the economy for some time to come."

Apartment building also recovered ground and returned to modest growth, increasing by 4.3 points to 52.6 points.

HIA Principal Economist, Tim Reardon, said residential housing remains on a solid footing.

"The ongoing boom in apartment construction in metro areas, combined with investment in infrastructure projects is ensuring strong conditions across the sector," he said.

"The housing industry has been cooling from record highs in 2016 but there remains a significant amount of work in the pipeline."