The Australian Industry Group (AI Group) and Housing Industry Association’s latest Australian Performance of Construction Index (PCI) has shown recorded a further 2.6 per cent slump, ending at 36.2 points in January - where readings below 50 indicate a contraction and the distance from 50 the strength of the contraction.

Steep declines in construction activity and new orders in January drove the fall, according to AI Group’s Director Public Policy Peter Burn.

"Commercial and residential construction are still contracting and, with further falls in new orders reported in January, the slump looks set to continue,” Mr Burn said.

All major sub-sectors finished in the red, according to the index, with the sector-wide new orders sub-index falling to 37.0.

Mr Burn said the impact of the poor results are being felt economy-wide.

“The impacts are being felt not only by the businesses and employees directly involved in the industry but also across the broader economy as industries in both the services and manufacturing sectors feel the pinch,” Mr Burn said.

The key findings of the January PCI are:

  • 2.6 points to record 36.2 in January (readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline).
  • The Australian PCI® has now been contracting for 32 consecutive months. Many businesses linked the ongoing decline in activity to poor market demand including limited opportunities for new work. Project delays also continue to bite.
  • The new orders sub-index was 37.0 points in January.
  • Across the sub-sectors: The house building sub-index was 1.4 points higher at 36.1, apartment building was 1.2 points weaker at 38.9, commercial construction dropped 6.1 points to 40.1 and engineering construction was up 0.2 points to 38.7.
  • The input prices sub-index remained high at 63.5.
  • At 33.3 - it was another weak month for the sector's employment sub-index.

The full report can be downloaded here