Housing and engineering construction have recorded the highest levels since 2010, with the Australian Industry Association's key index showing the sector is inching closer to expansionary territory.

The Ai Group's Australian Performance of Construction Index (PCI) showed that the combined construction sector had risen by 9.4 points to close at 45.6, where anything below 50 points marks a contraction, and the distance from 50 the severity of the contraction.

The growth was predominately driven by a lift of 15.4 points in the housing sub index to finish at 51.4 points, the first expansion in the sector since May 2010.

"While it is only one month's reading and comes after more than two and a half years of decline, the pick-up in house building activity is very welcome news," Australian Industry Group Director Public Policy, Peter Burn, said.

"The lift in engineering construction is also positive although the combination of these two growing sub-sectors was not sufficient to tip the construction sector as a whole into the black in February."

The key results for the February PCI are:

  • The latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) increased by 9.4 points to 45.6 in February. While not yet expanding, (readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline), it is the highest reading since June 2010.
  • Across the sectors, the house building activity sub-index rose by 15.4 points to 51.5 while engineering construction was 14.5 points higher at 53.2 in February.
  • However, commercial construction was 11.4 points weaker at 28.7. Apartment construction also continued to contract sharply, although at a slightly slower rate with the sector's activity sub-index increasing by 3.3 points to 42.2.
  • The new orders sub-index was 41.7 points in February
  • Employment lifted 15.1 points to 48.4.
  • Construction activity also improved by 8.9 points to 46.6.46.6.
  • The input price sub-index was 72.1 (up 8.6 points from the previous month) while selling prices continued to decline with the sub-index at 39.6.

Download the full February Australian PCI®