Engineering construction work fell at its sharpest rate in six years in October, according to an industry survey that also recorded continued contraction in house and apartment building activity.
The Australian Industry Group/Housing Industry Association Performance of Construction Index (PCI) report released on Thursday said activity rose 1.3 points on the previous month to 43.9 – a gain that leaves the measure below the 50-point mark separating expansion and contraction.
“Respondents again reported soft demand conditions due to a shortfall of new contracts to replace completed infrastructure projects,” the AiG summary of the monthly report said on the decline in engineering activity, which includes government-funded work on roads, bridges and utility supply systems.
“This appears to be related to slow progress on planned projects and lags between the design and development of projects and their transition through to construction.”
AiG policy head Peter Burn said many engineering construction businesses were concerned about the lull in infrastructure work.
“This highlights the need to shore up decision-making on infrastructure projects to help inject additional stimulus across the wider construction industry,” he said.
The PCI also registered a 15th consecutive month of shrinking house building activity but Dr Burn said it was positive that the sector’s trend reading for October – up 1.8 points to 48.2 – indicated that the pace of declines was easing.
The survey of businesses in the construction industry suggested apartment building activity contracted for the 19th month in a row, with the PCI sub-index reading unchanged at 34.7 points.
“It will be some time before the residential building sector is once again expanding; in the meantime low interest rates will provide support,” HIA economist Geordan Murray said.