Australian Building Construction Down, But Inflation Picks Up

Australia’s June Performance of Construction Index declined 4.3 basis points to 42.6 after having risen three consecutive months. Across the board, housing, commercial, and engineering activity continued to decline. New orders for buildings fell as well. The interesting portion of this figure is the fact that input prices rose for a third month. In June, such costs jumped 5.4% alone. Let’s not forget, 37,000 people have benefited from the government’s effort to place its citizens in their first homes through the use of housing grants.The combination of lower activity, lower new orders, rising construction costs, and governmental incentives propagates the notion that Australians are purchasing inventory that is already in stock, but that developers are still hesitant to take on any additional risk via the construction of new buildings. Over time, rising input prices may manifest themselves in the final price of each piece of architecture. Such a case may actually make it tougher for the government to meet its original goal of granting its citizens their first-home.