Construction activity continues to slow

Activity in Australia’s construction sector continued to slow in June after sliding in April and May following coronavirus restrictions.

The Australian Industry Group and Housing Industry Association’s Performance of Construction Index (PCI) rose by 10.6 points to 35.5 in June, but stayed well below the 50-point mark that signifies growth.

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

As a result, the key industry index in April slumped to its lowest level since 2005, although the pace of decline slowed the next month.

In June, all four sectors included in the index reported increases in customer queries but these are not yet translating into solid commitments for future work, indicating that business conditions remained negative across the construction industry. 

The house building (up 19.4 points to 39.6) and apartment (up 23.2 points to 44.8) sectors improved by a greater margin than commercial (up 8.5 points to 26.6) and engineering construction (up 8.3 points to 32.1).

New orders recovered 9.8 points to 32.8 while employment was up 11.3 points to 40.4.

“The pace of decline in the construction sector eased in June following the sharp falls in April and May. Nevertheless, construction activity, employment and new orders were all lower in June suggesting that it will be some time yet before the industry recovers,” Ai Group Head of Policy Peter Burn said. 

“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.

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