Construction sector declines again

Australia's housing and apartment construction sector has seen sharp contractions in April. Source: AAP

AUSTRALIA'S construction sector shrank for the 35th consecutive month in April, with continued decline in home and apartment building.

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI), shows the sector contracted in April at its fastest rate since September 2012.

Australian Industry Group (Ai Group) director of public policy Peter Burn said the index showed sharp contractions in housing and apartment construction, while the engineering construction subsector also weakened.

He said the figures were a sign the Reserve Bank of Australia (RBA) needed to cut the cash rate, currently at three per cent.

"With current activity, new orders and employment all contracting and with inflation well-contained, a further cut in interest rates is clearly desirable," he said.

Housing Industry Association (HIA) chief economist Harley Dale said federal government assistance was also needed if the troubled sector was going to improve enough to offset some of the effects of the expected decline in mining investment.

He said the figures were a warning to the government not to cut spending or increase taxes substantially in its budget on May 14.

"Talk of tax hikes and indiscriminate funding cuts doesn't do anything to address the lack of traction the non-resource economy currently displays in filling the hole left by mining-related investment," he said.

The PCI shows activity in the construction sector fell 3.8 points to an index level of 35.2 in April.

An index reading below 50 indicates activity in the sector is shrinking and the lower the reading, the greater the rate of contraction.

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Construction can be fatal: Grocon boss

CONSTRUCTION sites are risky environments and incidents such as Melbourne's triple fatal wall collapse can sometimes occur, the head of builder Grocon says.

Chief executive Daniel Grollo defended Grocon's overall safety record, saying it was a leader in the field of safety and has won national awards.

"Construction sites are a risky environment," he told the Nine Network on Friday.

"We work intensely with our teams to ensure that these incidents don't occur. On occasions, they do."

The wall collapse last month, which killed three people on Swanston Street, occurred on a Grollo construction site.

The City of Melbourne has said there was no permit issued for an advertising board fixed to the brick wall by Grocon.

But construction union boss Dave Noonan said he had been inundated with complaints about Grocon's safety record.

The union is planning a protest on Tuesday at the site of last month's wall collapse.

Mr Noonan said if the hoarding was safe the wall wouldn't have fallen over.

"Safety awards - we are not talking about the Logies here," he told the Nine Network in response to Mr Grollo's comments.

"We are talking about people's lives and we are inundated with complaints from Grocon sites about cranes working in high wind.

"This company is not conducting a safe enterprise. We do not have adequate safety on Grocon sites."

Mr Noonan said there had been two other examples of safety failures on Grocon sites: an impaling at the Myer Emporium site and a hoarding collapse in central Sydney.

But Mr Grollo said the hoarding collapse was three years ago.

"David, as you will know, and as the regulators said this morning in the Herald Sun, these incidents occur on construction," he said.

He said the union was politicising safety to justify an illegal, military-style campaign.

Victorian Premier Denis Napthine has condemned the proposed protest, saying the union should not pre-empt the outcomes of investigations into the incident for political purposes.

WorkSafe has not finished its investigation into how and why the brick wall collapsed and who, if anyone, is to blame.

AAP df/sbl/msk/de

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UK construction output slump continues

BRITAIN'S hopes of recovery have been dealt another blow after figures showed construction output shrank in March for the fifth month in a row.

Heavy snowfall and flagging demand hit activity in the construction sector last month, heightening fears the UK is heading for a triple-dip recession.

The latest Markit/CIPS purchasing managers index (PMI) recorded a reading of 47.2 last month for construction output - below the 50 mark which separates contraction from expansion.

Economists said hopes of avoiding another slump into recession are now pinned on Britain's dominant services sector after worse-than-expected PMI figures for the manufacturing sector earlier this week, which showed overall activity slumped for the second month in a row.

While March construction output was an improvement on February's 40-month low of 46.8, it remains much weaker than the average reading of 54.

Tim Moore, senior economist at Markit, said weak construction output "leaves the service sector as the last great hope for avoiding another slide in UK gross domestic product".

PMI figures for the service sector, which makes up more than three quarters of the economy, are released on Thursday.

IHS Global Insight economist Howard Archer said: "It seems highly probable that the (construction) sector suffered renewed and appreciable contraction in the first quarter of 2013 after all too rare expansion in the fourth quarter of 2012."

Civil engineering was the worst-performing area of construction in March - recording the fastest fall since October 2009 - while commercial building work fell for the seventh time in eight months.

But house-building offered a rare glimmer of hope as government stimulus schemes led to a marginal increase in activity.

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China Construction Bank profit hits $30b

CHINA Construction Bank, one of the country's top four lenders, says its net profit rose 14.1 per cent year-on-year in 2012, lifted by growth in net interest income.

Net profit was 193.2 billion yuan ($A30 billion) last year, rising from 169.3 billion yuan in 2011, the bank said in a statement over the weekend.

Net interest income - calculated from interest earned less interest paid - jumped 16.0 per cent on-year to 353.2 billion yuan and accounted for more than two-thirds of the bank's operating income last year, it said.

But the bank warned China's gradual liberalisation of interest rates may hurt its profits in the future.

The central bank last year expanded the range that banks' deposit and lending rates can float around benchmark levels, a move which could result in narrower net interest margins for banks.

The bank said it will "actively conduct research on interest rate liberalisation" and "cultivate and improve its pricing capability" in response to the reform.

The bank's non-performing loan ratio dropped to 0.99 per cent last year from 1.09 per cent in 2011, according to the statement.

Its capital adequacy ratio, the measure of its capital to its assets, rose to 14.32 per cent last year from 13.68 per cent in 2011, helped by a 40 billion yuan bond issue, it said.

Shares of China Construction Bank were up 2.43 per cent to $HK6.32 ($A0.78) at midday in Hong Kong and up 1.49 per cent to 4.78 yuan in Shanghai, where the company is also listed.

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