Construction employment skyrockets

The Australian Industry (Ai) Group and Housing Industry Association’s (HIA) Australian Performance of Construction Index (Australian PCI) fell by 0.8 points to 58.3 in May, largely maintaining the strong pace of recovery post pandemic.

Readings above 50 indicate expansion in activity, with higher results indicating a faster expansion.

A highlight of the May 2021 report was the growth in employment, which was the highest ever since Australian PCI reporting began in 2005. The employment index jumped by 5.2 points to 64.4, reflecting the high demand for workers to carry out the massive amounts of new orders for houses and infrastructure across the country.

The number was a stark contrast to conditions two years ago, when employment hit a record low of 39.2 and was sitting in the contraction phase.

Construction hits record high

Construction sector abuzz with acitivty

Construction index back in black

Relatively, the new orders and activity indices remain elevated and in expansion despite recording a drop from recent record high figures. The activity index dropped 7.1 points to 55.7 while the new orders index fell 1.8 points to 55.2.

"The national construction sector continued to lead Australia’s rebound in May with a further expansion of activity led by the house building and engineering construction sectors,” said Ai Group Head of Policy, Peter Burn.

“With new orders growing strongly again in May and the pipeline of infrastructure projects stretching over a number of years, there is a clear need for the industry and governments to move together to ensure there is adequate capacity in the sector and its supply chains to meet ongoing demand.”

All four sub sectors continue to grow, with housing construction building (down 2.2 points to 62.8) and engineering construction (up 1.7 points to 64.3) continuing to lead the way.

Commercial and apartment construction remained stable, sitting at 51.2 and 50.5 respectively.

“The extension of the HomeBuilder commencement deadlines will see new house building levels remaining elevated for longer,” said HIA Economist, Tom Devitt.

“This elevated level of demand is putting pressure on the supply of trades and materials.”

The supplier deliveries index for May was up by 3.4 points to 59.4, but builders across all sectors continue to report problems with delivery delays and elevated freight pricing, the PCI report added.

“This will continue to challenge house building until the market slows toward the end of this year," Devitt said.

The indices for input prices (up 3.3 points to 95.8) and selling prices (up 4.9 points to 78.2) both hit record highs in May as well, with strong demand for immediate commencements and disrupted supplies of materials and components contributing to widespread pricing pressures.

The wages index went down slightly by 0.4 points to 65.0, but remains well above the average for this index series, which is 59.5 points, the May PCI report concluded.