Construction hits lowest level since 2005

Australia’s construction sector has recorded a dismal April with a slump in activity, new orders and employment dragging a key industry index to its lowest level since 2005.

The Australian Industry Group and Housing Industry Association’s Performance of Construction Index (PCI) slid 16.3 points to 21.6 in April – well below the 50-point mark that signifies growth.

This has been the 20th straight month of contraction for the sector, leaving the index at the lowest level since September 2005 from when records are available.

Federal and state governments imposed strict social distancing rules and business closures in late March in an effort to contain the spread of coronavirus.

Slow activity on building sites due to projects that have either been cancelled or put on hold resulted in activity, new orders and employment falling at their sharpest rates on record.

Across the industry, activity slid 21.1 points to 18.0, new orders slumped 19.7 points to 15.7 and employment was down 10.8 points to 25.6.

All four major construction sectors saw a decline.

Apartment building was down 4.5 points to 22.1, house building fell 5.3 points to 37.1, commercial construction dropped 4.3 points to 24.5, while engineering construction was down 1.1 points to 36.6. 

“The worst-hit sectors were apartment building and commercial construction. House building took a tumble and engineering construction, while only down slightly on March, has never recorded a weaker performance than for April,” Ai Group head of policy Peter Burn said.

He is calling for assistance measures provided by federal, state and territory governments to be backed up with an orderly and safe easing of restrictions that are hindering a return to work.

HIA chief economist Tim Reardon said the positive momentum in the housing market had been disrupted.

“The speed with which the industry is likely to bounce back, especially apartment markets in the larger capitals, will depend very much on the outlook for overseas migration,” he said.

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