Worst may be over for construction sector as decline slows in July ACTIVITY in Australia's construction sector has fallen for the 38th consecutive month, but the pace of decline is slowing. The Australian Industry Group-Housing Industry Association Australian Performance of Construction Index (PCI) rose 4.6 points to 44.1 in July. An index reading below 50 indicates activity in the sector is falling and the lower the reading, the greater the speed of the decline. Ai Group director of public policy Peter Burn said the fading mining-related construction activity was not being offset by the other construction sub-sectors. "While the house building sub-sector approached an expansion in activity, apartment-building slowed at a steeper pace and commercial construction was also slower in July," he said. The industry continues to face a tough and uncertain environment characterised by tight credit conditions, a lack of public sector building activity and subdued investor sentiment. The further reduction in the cash rate announced yesterday will be welcomed by the construction industry and can be expected to exert a much needed favourable impact over the next few months. Housing Industry Association chief economist Harley Dale said the transition of the Australian economy driven by mining investment to one driven by other sectors is not taking place. "A recovery in non-resource-related construction activity is crucial to a successful rebalancing of growth," he said. The latest Australian PCI update takes us in the right direction with an improving profile for detached housing and engineering construction providing encouragement, although both sectors are still in negative territory.