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Friday, 7 June 2019

Apartment building still shrinking at a furious pace

Pipeline shrinking

A woeful reading for the AiG Construction Index (PCI) of 40.4 indicated the steepest fall in construction activity in six years in May 2019.

About 1 million Aussies are directly employed in construction, so this is going to drag hard. 

A reading of above 50 denotes expansion, but we were a mighty long way from that as election jitters weighed heavy.

Source: AiG

Apartment construction activity recorded a 14th consecutive monthly contraction with a another weak reading of just 37.7. 

Source: AiG

Apartment construction activity has now contracted for 20 of the past 22 months, and it won't be too long before there is talk of undersupply again, especially now some states have deterred foreign buyers with stamp duty surcharges.  

House building fared even worse with a reading of only 34.4, way below the 12 month average of 40.7.

There was a notable spike in futures markets today, now seeing a second interest rate cut in July as more likely than not, with a 57 per cent implied probability.

The clincher would be the labour force figures, with any significantly apparent weakness triggering a cut. 


The glut of apartments in Brisbane has generally been filled up as interstate migration has increased.

Here's a #FlashbackFriday to what I was writing about in 2015, as the crane operators were going at it full tilt!