August 2020 – OVERVIEW
Construction industry slump continues into August 2020
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) fell by 4.8 points to 37.9 points in August. After a pause in July, the pace of decline in business conditions worsened again across all construction sectors, as COVID-19 activity restrictions stepped up in Victoria and state borders were closed again elsewhere. Results below 50 points in the Australian PCI® indicate contraction with lower results indicating a faster rate of contraction. The ABS estimates that value-added output from the construction industry fell by 8.2% q/q and 10.3% p.a. nationally in Q2.
Across the states, the Australian PCI® remained well below 50 points in all states. It fell sharply (more negatively) in Victoria and WA, remained the same in NSW and improved in SA and QLD. Builders around the country said they are being adversely affected by the lockdown in Victoria plus border closures in other states and reduced confidence. New orders are down sharply across the board, with few customer inquiries translating into firm contract commitments. Regulatory processes, OH&S requirements and disrupted supplies are slowing work on site, even in locations with no local activity restrictions for construction. Input prices have jumped higher due to local and international supply delays.
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