Construction Industry’s Nine Month Growth Streak Broken by Lockdowns

A closed construction site in Fairfield in Sydney, Australia, on July 18, 2021. (Jenny Evans/Getty Images)

Australia’s construction industry contracted for the first time in July after nine months of continuous expansion after harsh lockdown restrictions were implemented in various states around the country.

The fall, which was noted by the Australian Industry Group (Ai Group) and the Housing Industry Association’s (HIA) construction performance index, fell 6.8 points to 48.7 in July. According to the Index, any reading below 50 points indicates contraction in activity, with lower numbers indicating a stronger pace of contraction.

“With Australia’s two largest states affected by COVID-19 outbreaks and associated restrictions, the construction industry slipped into contraction in July after a robust nine-month expansion,” Ai Group Head of Policy Peter Burn said.

HIA chief economist Tim Reardon said the inability to work onsite has resulted in a 14.4 percent fall in building activity.

“Lockdowns in other cities have also impaired activity and new orders,” Reardon said.

However, it is not all bad news. Burn noted that the industry outside of New South Wales and Victoria continued to grow, with many builders and constructors reporting difficulty filling skilled labour positions.

“The negative national result masked continued growth outside of NSW and Victoria and further expansions in both house building and commercial construction,” Burn said. But he noted that the apartment building sector, which was already shrinking, contracted further in July.

Reardon said that a record volume of new detached homebuilding and renovation work await workers once restrictions ease.

“For builders in other regions, their main challenge remains keeping up with the large volume of work,” Reardon said. “Capacity constraints will remain a major challenge for at least the rest of this year.”

Construction work in Greater Sydney resumed on July 31 outside of the eight LGAs of concern.

However, the industry is urgently calling on the government to classify construction workers as “essential” to allow those in the eight LGAs to resume onsite work.

In a joint statement on Monday, the Australian Constructors Association (ACA) and the construction union, CFMEU, said the reopening of Greater Sydney construction remains at risk as long as ‘Authorised workers’ do not include construction workers.

“Many construction sites will struggle to reopen following the end of the two-week industry shutdown as over half the workforce is located in the locked-down LGAs and is therefore not authorised to travel,” ACA CEO Jon Davies said.

CFMEU NSW Secretary Darren Greenfield said many of these workers are supervisors, who are required on-site to ensure work is undertaken safely and operate critical plant and equipment.

“Construction has been significantly impacted by the two-week shutdown, and we can’t afford any further delay in reopening of work sites,” Greenfield said.