Australia’s construction sector continues to struggle according to a new survey from the Australian Industry Group, but there are signs that the pace of decline is at least slowing.
The AIG-HIA performance of construction index hit 42.2 points in August, still below the 50-point level that separates expansion from contraction.
But the index did rise 2.9 points in the month, providing some hope for a sector that has been battered by the credit crunch. While engineering and commercial construction remains depressed, the housing market is performing relatively well.
“The latest results show that total industry activity is continuing to fall amid tight credit conditions and ongoing difficulties among firms in securing new project work, particularly within the engineering construction sector. Consequently, the industry experienced its 17th consecutive month of declining employment,” AIG’s associate director of economics and research, Tony Pensabene, said in a statement.
“However, more positive developments were the moderation in the pace of the industry’s contraction, and the continued growth in house-building activity, resulting in an easing in the pace of decline from the extreme lows of the start of the year.”
Shares flat despite good Wall Street lead
The Australia sharemarket has started the week on a slightly positive note, with the benchmark S&P/ASX 200 up 9.5 points or 0.2% to 4445 points at 11:55am.
While the big four banks – ANZ, Westpac, NAB and Commonwealth Bank – all recorded small gains, AMP and Wooloworths rose slightly.
However, two giant losers stood out.
Shares in agribusiness company Elders plunged 41% to 23c after the company reported a loss of $415 million for 2008-09 and announced it would raise up to $550 million via a deeply discounted rights issue.
Babcock & Brown Infrastructure was another big loser, with its shares plunging almost 30% to 1.8c. The company’s future remains under a cloud and it remains in talks with a as-yet-unnamed cornerstone investor who the company hopes will help to alleviate concerns over B&B’s $9.1 billion debt.
G20 to retain stimulus measures, target executive pay
Finance ministers from the 20 largest economies in the world have decided to keep stimulus measures in place until the global economic recovery gains more momentum.
“The classic errors of economic policy during crises are that governments tend to act too late with insufficient force and then put the brakes on too early,” US Treasury Secretary Timothy Geithner said. “We are not going to repeat those mistakes.”
The G20 also spent time looking at measures to prevent another banking sector calamity, and says it will investigate ways to curb executive pay and bonuses, particularly at banks which received taxpayer-funded bailouts at the height of the crisis.
The G20 also wants rules to ensure banks have a greater capital cushion to help them survive systemic shocks.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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