This latest release from AIG on their construction index for the month of September is truly truly dismal. All subsectors of the index are contracting at an accelerated rate. Housing, Apartments, Commercial and Engineering all down. Remember anything above 50 means it is expanding, anything below 50 means it is contracting. So here is what we have –
- Houses – 24.1
- Apartments – 21.0
- Commercial – 25.8
- Engineering – 41.6
The index has fallen for the last 16 months and all 16 months have been in contracting mode. If we go back 25 months back to September of 2009 the index has only ever been above 50 4 times.
This does not reflect an economy that is confident above the future. Even the engineering sector which is suppose to reflect the mining industry is in contraction. With the recent spate of layoffs, none other than those coming from bluescope, do you really think the mining industry is going to be the white knight in shining armour? Dont’ think so. If recent reports about China’s secondary loan market is anything to go by, this does not bode well for Australia. In fact it does not bode well for the rest of the world.
Markets around the world are gyrating wildly. I’ve never seen the AUD go up and down like a yoyo before. It has come down from a high of 1.10 to .95 in less than a few months. That is volatile. It’s times like these where cash and gold are nice to have. Brace yourselves people.
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