The nation’s construction sector has recorded a steep decline in the March, according to the Australian Industry Group’s (Ai Group) Australian Performance of Construction Index (PCI).

The PCI recorded a 6.6 point drop to end March at 39.0 points, where readings below 50 indicate a contraction in the sector, with the distance from 50 indicating the strength of the decline.

All the major sub-sectors were in negative territory in March - engineering construction registered the steepest fall - dropping 14.8 points to 38.4. Commercial construction had the lowest reading - 29.2. New orders, employment and deliveries from suppliers were all weaker in March.

Australian Industry Group Chief Economist, Julie Toth, said: "After the strong improvement in February the survey results for March are clearly disappointing and a further indicator of the fragility of conditions across the construction industry.”

“Driving the industry's poorer performance was a return to contraction in house building and engineering construction, combined with sharper falls in commercial and apartment building activity. Of concern, the current stretch of decline in new orders for the industry has now extended to 34 months as businesses continue to be hampered by a shortage of new work, project delays and weak investor sentiment.”

Australian PCI® Key Findings for March:

  • The March Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) was down 6.6 points to  39.0
  • The Australian PCI® has now been contracting for 34 consecutive months.
  • Across the major sub-sectors: house building was 4.5 points lower at 47.0, apartment building activity dropped by 8.0 points to 34.2, engineering construction was 14.8 points weaker at 38.4 while commercial construction was broadly unchanged at a weak 29.3
  • New orders fell 5.7 points to 36.0.
  • Employment was also weaker at 39.2.
  • Many businesses linked the on-going declines in activity to subdued levels of incoming work, tight credit conditions and project delays.

Download the full March Australian PCI®