In a
further indication that the two-speed nature of the construction industry is
reflecting on the manufacturing sector, the latest data shows that cement
production in Australia is running hot while manufacturing activity for bricks
and tiles remains weak.
In the
first quarter of this year, data from the Australian Bureau of Statistics
indicates strong levels of activity in cement manufacturing. Compared with the
same quarter last year, production of Portland cement rose by 12 per cent in
the March quarter while that of Portland cement clinker was up by 5.3 per cent.
This
increase, however, was not the case for bricks and tiles. Production of clay bricks for structural
purposes was down 13.8 per cent compared with the March quarter last year while
clay bricks other than for structural purposes dropped 37.6 per cent over the
period and concrete brick, block and paver production fell 12.5 per cent. In
roofing materials, meanwhile, production of terracotta roofing tiles was down
nearly 30 per cent while that for concrete tiles was down 9.5 per cent.
The latest
data illustrates how the two-speed nature of the construction industry is
flowing back to manufacturers of construction materials. Because of its use in
roads, where construction activity is increasing modestly but steadily, cement
manufacturers have been spared much of the impact of weak building conditions
while makers of bricks and tiles have seen a downturn.
Moreover,
the weakness in manufacturing of tiles may be a particular sign of specific
weakness in the roofing industry. The latest HIA Trades report, for example,
indicated a significant oversupply of tradespeople in the roofing trade, though
the same report found an undersupply in the ceramic tiling trade.
Overall
Production Rising
Whilst the
ABS report provides an excellent breakdown of production levels regarding
individual types of construction materials, it does not provide any indication
as to whether production of construction materials is rising or falling.
The best
guide for that information is the monthly Performance of Manufacturing Index
published by Australian Industry Group and accounting firm PwC.
That report
shows in an increasingly brightening picture. Following subdued activity over
the summer, last month’s PMI showed manufacturing activity in construction
materials growing strongly even as manufacturing activity in other sectors fell
into decline.
What the
latest ABS report does appear to show, however, is that there are substantial
differences in manufacturing activity across different materials used in the
sector.
Overall,
construction manufacturing is back on the rise, but some materials are in
greater demand than others.
Source
Designbuildsource By Andrew Heaton
