Following months of positive or stable conditions, three of the four construction sectors – housing, apartments and commercial – saw activity fall significantly in June. The Australian Performance of Construction Index (Australian PCI®) fell by 4.2 points to 46.2 during the month.
The Ai Group/HIA Australian PCI® is a seasonally adjusted national composite index based on activity, orders and new business, deliveries and employment. A reading below 50 indicates that the sector is declining.
Continuing challenges
Challenges continuing to blight the sector include labour shortages and delays in supplier deliveries. Builders also reported ongoing concerns about increases in inputs, including fuel, and labour prices.
“The Australian construction sector faces significant pressure,” said Jeffrey Wilson, Director of Research & Economics at the national employer association Ai Group. “Supply constraints for staff and materials are continuing to grow, with input prices setting a record in June. The effect of rising interest rates was evident across house building and apartments as builders reported a drop in enquiries and new orders.”
A more optimistic outlook
However, HIA Senior Economist, Nicholas Ward, struck a more optimistic note.
“Demand for new detached homes and renovations has been exceptionally strong during the pandemic,” he said. “There is a record volume of detached houses under construction, with more work entering the pipeline each month. With this large volume of work to be done, builders can expect to be at capacity in 2022 and 2023.”
