Nov. 7 (Bloomberg) -- A gauge of Australian construction showed the building industry contracted at a slower pace last month on signs that new orders and hiring improved.
The construction performance index rose to 34.7 in October from 30 a month earlier, which was the weakest reading since February 2009, a survey by the Australian Industry Group and the Housing Industry Association released in Sydney today showed. The result was the 17th consecutive month under 50, the dividing line between expansion and contraction.
“While global economic uncertainties persist and domestic confidence is yet to bounce back, the Reserve Bank’s decision last week to reduce interest rates could help build the momentum towards recovery in the sector over coming months,” Peter Burn, director of public policy at the Australian Industry Group, said in a statement.
Reserve Bank of Australia Governor Glenn Stevens lowered the nation’s benchmark rate last week to 4.5 percent, the first reduction in 31 months, as inflation slows and Europe’s debt crisis dims prospects for global growth. Employment in Australia weakened this year as the currency’s climb hurt non-resource companies and consumers salted away cash rather than spend it.
Today’s report showed new orders advanced 8 points to 31.9, and a gauge of employment rose 5 points to 37.3 last month. Construction of houses gained 9.2 points to 33.3 and apartments increased 4.6 points to 25.6, it showed.
Investors are betting there is at least an 80 percent chance Stevens will lower borrowing costs again next month to 4.25 percent, interbank cash-rate futures show.
The Australian dollar, the world’s fifth-most traded currency, was at $1.0410 at 8:57 a.m. in Sydney. It has weakened in recent months as Europe’s crisis intensified, having reached $1.1081 on July 27, its strongest since exchange controls were scrapped in 1983.
--Editors: Brendan Murray, Garfield Reynolds
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