The Australian Industry Group has warned of a “material impact on a national level” in the construction sector, following tightened COVID-19 restrictions in Victoria.
While the Australian PCI recorded a 7.2-point increase to 42.7 points in July 2020, the Australian Industry Group (Ai Group) has expressed concerns that Victoria’s Stage 4 restrictions may cause significant disruptions in the construction sector.
July put the Australian PCI back in a similar range to its February 2020 level, and while still in the red, it indicates the industry was beginning to bounce back from COVID-19.
Ai Group head of policy Peter Burn said the industry will have a bitter pill to swallow in the coming months, due to Victoria’s harsher restrictions that have been enforced to muzzle the high COVID-19 case numbers.
“The sudden tightening of restrictions on Victorian construction projects will have a material impact at a national level in the coming period and will have particularly severe consequences for activity, employment and on the many businesses that supply into the construction sector in Victoria,” he said.
“Even before the new restrictions were announced, the immediate outlook for the sector was weak, with new orders falling again in July. Further policy measures will be required to stem a longer wave of job losses and business closures.”
New orders rose by 10.7 points in July (43.5), putting them back at July 2019 levels, which were still in negative territory.
Ai Group has flagged the national JobKeeper and Apprentice Support schemes for saving jobs in Australia’s construction sector, as it battles with the COVID-19 pandemic’s material impact.
Lockdown to cause job shutdown
According to Ai Group chief executive Innes Willox, Victoria’s lockdown will reap sobering statistics across the entire jobs industry.
“The severity of these impacts is mind-boggling and sets Victoria up to be Australia’s economic laggard,” Willox said. “The national cost of the lockdown is estimated to be $10 and $12 billion and between 250,000 and 400,000 jobs are expected to be lost.
“It is critical that the Victorian Government acts quickly to make sure that the real damage is scaled back as much as possible and as rapidly as possible.”
Willox conceded that while progress “ “Businesses such as metal fabricators and others in the metals supply chains have received very welcome adjustments and can now proceed with a greater degree of confidence.”
Metal fabricators and extractive services consultancies were initially announced as parties that could not run in Melbourne during the six-week lockdown. This announcement was revised within 72 hours.