Construction: Australian trade bodies present a generally dismal picture

The HIA report said "Housing finance figures point to an emergency recovery in trade-up buyer and investor numbers but looking beyond first-time-buyer related activity we're not as yet at a point where we can talk about a broad-based recovery in private new home demand."

The report from the AIG agreed: looking at the wider construction industry it said "a number of firms reported that market demand continued to be adversely affected by low investor confidence and tight credit conditions." This it said had resulted in "delays in tenders and intense competition to secure new contracts."

But there was a note of optimism in the AIG report: "residential builders frequently noted that customer enquiries and buying levels had continued to improve as a result of low interest rates and the stimulus from the First Home Owners grant."

That small piece of positive news has been seized on by media anxious to have something good to report.

But in truth, it's nebulous and small comfort.

What is actually happening, AIG demonstrates, is that things are still getting worse, but they are getting worse less rapidly. There is, it says "a slight moderation in the rate of contraction in industry activity." Plain English translation: things are still terrible, but not as terrible as the might have been.

The downturn in apartment and commercial construction has slowed - but the situation is still worsening month by month.

Companies have increased their capital utilisation by 0.2% as against July: now it's reached an industry average of 68.8%. Translation: construction companies are still trying to stay liquid indicating that they do not have confidence that cashflow will turn positive any time soon.

Further evidence that the good news isn't really good is that AIG reports that companies are reducing their calls on suppliers for materials and that "further declines in workloads across most sectors led to continued cutbacks in employment levels during August." Translation: less work means less people so employment in the construction sector is rising.

That has a direct impact on the sub-contractor market which may not show independent contractors as unemployed - and on the migrant labour market both domestic and international. AIG says "this is the 17th consecutive month that construction firms have reduced their workforces reflecting on-going adjustment to declining activity levels." Translation: less work means less jobs and this is now a long-term trend.

Also, AIG reports, that pay rates across the sector have, on average, reduced.

Although new orders in house building have increased for the first time since January 2008, the rate there is seemingly rapid: it's now 36% above the low in November 2008. But a 35% gain on virtually zero is a bit like dealing in penny shares: a small value rise can create an impressive percentage figure.

For apartments, "new orders remained in negative territory for the 19th straight month of decline." But AIG says the rate of collapse in that sector is reducing.

That's not the case in the engineering construction market where which fell "at an increased rate."