Australia’s building industry shrank in December for a second month as demand fell for new apartments and engineering construction.

The index rose 1.7 points to 49.3 from November, according to a survey by the Australian Industry Group and Housing Industry Association released in Sydney today. A reading below 50 shows the industry is shrinking.

The contraction follows the central bank’s decision to raise borrowing costs on 1 Dec by a quarter percentage point to 3.75%, the third increase in eight weeks. Governor Glenn Stevens will boost the rate to 4% this quarter, investors say.

bloomberg.com