SYDNEY: The Australian construction sector expanded at a modest pace in October, after a rise in building activity and employment levels.

The Industry Group/Housing Industry Association Performance of Construction Index grew by a seasonally adjusted 0.1 points in October to 50.9 points.

Slight growth in house building and a boost in apartment building pushed the index slightly higher than September's level and further above the 50-point mark separating expansion and contraction.

Industry group associate public policy director Peter Burn said while growth in the sector is welcome, it remained tentative and uneven.

"A more marked fall in commercial construction and a fifth consecutive month of decline in work undertaken on engineering construction projects shows that the pace of growth remains subdued and patchy across the industry," Burn said yesterday.

"This reflects the on-going tightness of credit conditions, fewer new orders and excess capacity."

- AAP