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The building boom was softer in December

08 Jan, 18

Construction growth in Australia moderated slightly in December, but still expanded for an 11th month in a row.

The Ai Group and Housing Industry Association Performance of Construction Index (PCI) eased 4.7 points to 52.8 points in December, remaining well above the 50-point level indicating expansion.

CommSec economist Ryan Felsman said the key housing construction sector is likely to remain solid in 2018, supported by low interest rates and strong population growth.

Likewise, the boom in government spending on transport-related infrastructure, together with major commercial building can continue boosting employment and lifting wages.

"The pace of wages growth has remained relatively high during 2017 amid reports of a shortage of skilled workers as major projects ramp up," Mr Felsman said.

The slower growth in housing, engineering and commercial construction for December, was offset by an increased growth in apartment building.

Apartment building activity grew for the first time in four months, despite the recent tightening of investor-only lending.

The improvement in apartment building was welcomed by HIA senior economist Shane Garrett, who said the lift in activity came despite tighter regulatory management and restrictions on foreign investors.

"Foreign investor participation in the apartment market is a vital strand of supply to the rental markets right across Australia," Mr Garrett said.

"Impeding investor participation risks undermining the healthy functioning of rental markets everywhere."

The 3.0-point rise in apartment building to 50.7 was well below the recent high of 68.5 from May.

Engineering construction and house building remained the top performers, but overall new orders slipped into negative territory for the first time in eight months.

Builders and constructors dealt with higher energy, construction materials and wages costs, the latter lifted by the continuing transport infrastructure boom.

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