Jackhammers going very quiet

Apartment construction collapses

You may have noticed that my 'daily' blog somewhat failed to live up to its billing over the past 48 hours or so, the reason being a shocking bout of the 'flu. 

Yuck.

Anyway, thankfully I'm almost back on an even keel...but it seems as though some parts of the economy are starting to look a bit crook.

The (historic) retail trade figures for November were a little better than expected but AiG's triumvirate of performance gauges for December didn't look too inspiring. 

The manufacturing gauge was mildly contractionary (49.5), while services was still in positive territory but slowed (52.1).  

The construction reading came in at just 42.6, the weakest result in half a decade, while the components of the index made for some eye-popping reading. 

House building slowed sharply again to just 35.4, while apartment activity has essentially collapsed at just 26.3.

Wowsers.

There are still many apartment projects under construction, but through both hard evidence and anecdotally (and simply through visual evidence) many have slowed, been delayed, mothballed, or increasingly are at outright risk of failing. 

Source: AiG

Messy.

Now, to be sure, there is still a significant pipeline of non-residential building work approved.

However, Aussies constructing, buying, and then furnishing properties is known to have a strong multiplier effect in the economy, and the reverse also holds true. 

The Housing Industry Association once again commented that...well, you already know what they said!  

The wrap

All three performance gauges weakened in December, and within the construction reading for house building further contracted sharply and apartment construction was basically annihilated. 

In theory this should see the extension of more credit to housing investors in 2019, following four years of tightening. 

Who knows, however, what gems the Royal Commission will come up with? 

We'll find out more at the end of January.