Australian recovery?

The Australian Industry Group's Performance of Construction Index (PCI) rose by 10.4 points to 46.9 in May. Although still below the key 50-point level that separates expansion from contraction, the rate of contraction was the slowest it's been for 14 months.

"Despite the continued subdued state of the construction industry, the latest data provides evidence that the industry is starting to recover some ground following the deterioration during 2008 and the first quarter of 2009," said Tony Pensabene, associate director of economics and research at the Australian Industry Group (AIG).

Housing Industry Association (HIA) chief economist, Harley Dale said, "The slowing in the rate of contraction, especially for detached house construction, is an encouraging sign that the sector may have bottomed in the first half of 2009.

"Housing starts are forecast to grow by +11% in the second half of 2009," he said.

A joint AIG and HIA statement said that across the sectors, the rate of decline moderated for work undertaken on commercial, house and apartment building projects, while engineering construction activity increased for the first time in ten months, albeit at a marginal rate.