The joint Australian Industry Group/Housing Industry Association Australian Performance of Construction Index has sunk to its lowest monthly result since May 2013.
Alarm bells are ringing for Australia’s construction industry after the Australian PCI crashed to 37.9 per cent in March.
This marked a 4.8–point drop from February’s already diminishing levels.
Ai Group’s head of policy Peter Burn said trends in the decline of commercial, engineering and apartment activity has harmed the sector’s performance, especially due to the impact of COVID-19.
“There was wide reporting of weaker demand conditions during the month,” he said. “Construction businesses linked this to economic uncertainty due to the COVID-19 pandemic which had dampened client confidence, increased risk aversion and lowered investment demand.”
“In terms of the outlook, conditions look more fragile than they have for some time with new orders dropping sharply into negative territory with particular weakness in the pipelines of new work in the commercial and apartment sectors on a nationwide basis.”
The index results for March mark the Australian PCI’s 19th consecutive month of shrinkage.
Construction activity was down six points to 39.1, while new orders also continued to decline with steeper rates than February (down 10.3 points to 35.4).
House building rose by 0.3 per cent to 53.2, with apartment and commercial structures dropping by 1.5 points to 31.9 and 1.6 points to 35.1 respectively.
“Home building activity has recorded its fourth consecutive month of growth in March providing further evidence that the market started the year off looking up,” HIA economist Angela Lillicrap said.
“Restrictions on trade have impacted the house building new orders index which contracted further in March. Consumers often delay purchasing decisions during times of economic uncertainty.”