AIG Australia Construction Index

The Australian Industry Group (AIG) Construction Index reflects the state of the national construction industry. This index is based on a monthly survey of Australian construction companies. The indicator calculation takes into account all types of construction work in the country, including residential and hotel construction, construction of industrial buildings and facilities, engineering and commercial construction, etc. The calculation includes commercial construction work and construction conducted by government.

This is a diffuse index, which is calculated as a weighted set of five key industry activity indicators. These include:

• Construction activity (the full report version provides construction activity data by sectors)
• New orders in the sector
• Employment
• Input costs and selling prices
• Deliveries of inputs from suppliers

Participants estimate relative changes, i.e. whether the value has increased, decreased or has not changed during the specified month. Each of the values used for the index calculation is given a certain weight.

Readings above 50 indicate the expansion of the construction activity, those below 50 are an indication of a decline. The distance from 50 characterizes the speed and strength of changes in the industry.

The construction index is an important indicator of Australian economy. It is closely correlated with other macro-statistical indicators and can be considered as a leading indicator of the housing market development and commercial activities in the country. The indicator growth can have a positive effect on the Australian dollar quotes.