The Australian Performance of Construction Index (PCI) has fallen by 11.1 points over the holiday period, with COVID-19 isolations and supply chain disruptions wreaking havoc.
Presented by the Australian Industry Group (Ai Group) and the Housing Industry Association (HIA), the seasonally adjusted Australian PCI fell to 45.9 during December and January – where results below 50 points indicate contraction of the industry.
Ai Group’s chief policy advisor Peter Burn explained the likely cause of the industry’s fall from grace.
“The Australian construction industry continued its volatile run of the past six months with a slump in performance over December and January,” Burn said.
“This latest downturn was driven by disruptions to labour supply, material supplies and business and household confidence associated with the rapid spread of the Omicron strain.”
Overall activity fell 18.9 points to a score of 41.1, with apartments and commercial activity the biggest losers in the category, falling 34.9 and 29.3 points, respectively.
New orders fell 10.8 points to a score of 47.7, while employment was the only metric to remain above 50 points, scoring 56.5.
HIA economist Tom Devitt said the next year in construction would look far different from the previous one, but activity would be positive.
“Home builders are still limited by the availability of land, labour and materials. The HomeBuilder pipeline has only recently started reaching completion, with many more completions to come,” Devitt said.
“Ongoing demand as part of the shift in homebuyer preferences towards more space and greater amenity will continue to keep builders busy into 2023.”
In contrast, the Australian Bureau of Statistics (ABS) released its Building Approvals results for December 2021 and found a seasonally adjusted rise of 8.2 per cent for dwellings approvals.
ABS director of construction statistics Daniel Rossi said the growth did not extend to private housing.
“The rise in the total number of dwellings approved in December was driven by an increase in approvals for private sector dwellings excluding houses, which rose 27.5 per cent,” Rossi said.
“Private sector house approvals remained subdued, falling 1.8 per cent in December, following a 1.6 per cent decline in November. The series has fallen 31.5 per cent since the April 2021 peak.
“While approvals for private houses have fallen from all-time highs, the series remains at historically elevated levels, with the December result 20.5 per cent higher than the pre-pandemic level in December 2019.”
View the latest Australian Performance Construction of Index report.
November construction maintains sustainable growth