Australia's Construction Index Shrinks for Fourth Month in June

By Victoria Batchelor

July 7 (Bloomberg) -- Australia's construction industry contracted for a fourth month in June as lending rates at a 12- year high reduced demand for houses and factories.

An index measuring construction edged up to 40.3 points last month from 36.9 in May, according to a report by the Australian Industry Group and Housing Industry Association released in Sydney today. A reading below 50 indicates the construction industry is declining.

Slowing building work will further cool an economy that grew at the weakest pace in almost two years in the first quarter. Reserve Bank Governor Glenn Stevens left Australia's benchmark interest rate unchanged at 7.25 percent last week, saying four increases since August are working to moderate domestic demand and damp inflation pressures.

``The outlook remains subdued, with further weakness in activity likely to persist over coming months,'' said Tony Pensabene, an associate director of economics at the Australian Industry Group. ``Falling demand, weaker economic conditions and increased competition for work are cited by firms for the continued falloff in activity.''

Today's survey is based on responses from about 120 construction companies on sales, new orders, deliveries, employment and input costs.

To contact the reporter on this story: Victoria Batchelor in Sydney at vbatchelor@bloomberg.net.