June 2020 – OVERVIEW
Construction industry contracts at a slower pace in June 2020
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) rose by 10.6 points to 35.5 points in June. This indicates business conditions remained negative across the construction industry in June, but the pace of contraction eased from the record lows experienced since March due to the COVID-19 pandemic. April 2020 was the lowest result since this series commenced in 2005. Results below 50 points indicate contraction with lower results indicating a faster rate of contraction.
Among the four sectors included in the Australian PCI, all activity and new order indices improved in June, but remained firmly negative (under 50 points). The housebuilding and apartment sectors improved by a greater margin than did commercial and engineering construction. Builders said that demand for new houses and renovations is lifting (from close to zero) in response to federal and state government grants, reopening display homes and lifting activity restrictions in most (but not all) Australian states. Other builders speculated that homebound families might be planning to divert their holiday savings into renovations.
Looking ahead, the new orders index improved in June after recent record lows, but it remains firmly negative at 32.8 points. All sectors reported increases in customer queries and requests for quotes in June, but these are not yet translating into solid commitments to future work. In the meantime, the JobKeeper and Apprentice Support wage subsidy programs were highlighted as essential support to struggling businesses across all construction sectors.
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