Construction activity in Australia in December continued to decline with only the engineering construction showing improvement.

The Australian Industry Group Australian Performance of Construction Index reached 43.8 points in December, an increase of 1.6 points while engineering construction increased by 18.9 points for the first time in half a year to reach 58.3 points due to robust demand from the resources industry.

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Sluggish construction activity was attributed to poor weather conditions and declining demand overall. Moreover, house construction activity plunged for the seventh month in a row in December with its sub- index rising by 1.5 points to 39.5. Commercial work increased reached 44.2, a rise of 6.2 points. The index also showed that new orders fell by 2.7 points to 37 and apartment building activity was still in a slowdown with the sub-index rising by 5.7 points to 38.6 points.

Australian Industry Group Director Public Policy, Dr Peter Burn, said the construction industry was weaker at the end of the year. "The slower pace of decline in December is dampened by reports that new orders continue to fall in all four sub-sectors," Dr Burn said. "Businesses and home buyers continue to refrain from committing to new projects with expectations of further rises in interest rates a likely factor."

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