The Australian Performance of Construction Index (PCI) has dropped by 16.3 points to 21.6 in April, the weakest overall performance of the construction industry since the survey began in September 2005.
Readings below 50 indicate a contraction in activity, with the distance form 50 indicating the strength of the decrease.
Slow activity on building sites due to projects that have either been cancelled or put on hold has led to a sharp fall in activity, new orders and employment.
The index’s decline marked the largest month-to-month fall in its history, exceeding those recorded during the global financial crisis.
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The index is a joint initiative of the Australian Industry Group and Housing Industry Association.
AI Group Head of Policy Peter Burn said the fallout from COVID-19 played havoc with the domestic construction sector in April.
“The Australian PCI, which we have been compiling since 2005, has never recorded a lower seasonally adjusted performance and has never fallen as rapidly in a single month as it did for April,” Burn said.
“For the sector as a whole, seasonally adjusted measures of activity, employment and new orders were at all-time lows. 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.
“Two particularly disconcerting indications are the precipitous fall in new orders and the first ever indication of a monthly fall in nominal wages (since 2008 when we started compiling this series).”
HIA Chief Economist Tim Reardon said the positive momentum that existed in the housing market has been disrupted as consumer confidence started to evaporate from March.
“The seasonally adjusted indexes for building activity and new orders in both the house and apartment markets all suffered their largest single-month drop in the history of their respective series, falling to record lows.”
“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,” Reardon said.