Home construction nearing expansion, index shows

The Australian Industry Group recently released its latest statistics on the state of the country's construction industry, which showed that home building and engineering construction are surging and could be headed for expansion soon.

The Ai Group's Australian Performance of Construction Index rose from 39.5 in June to 44.1 in July, with the new orders segment of the index rising and supporting the rapid increase. The new orders index rose from 34.8 to 42.9, bringing the contraction rate of this segment down to its slowest in 2.5 years.

Peter Burn. director of public policy at Ai Group, stated that the falling cash rates for the past two years have likely had a major effect on construction activity.

"The further reduction in the cash rate announced yesterday will be welcomed by the construction industry and can be expected to exert a much needed favourable impact over the next few months," Mr Burn said in a media release.

The house building segment was also a bright spot in the report, rising from 42.3 to 49.3 - just shy of the 50-point mark that would suggest the house building sector is expanding once again.