Tough conditions in the national construction industry have left the Australian Performance of Construction Index (PCI) relatively unchanged in August.
According to the Index, which is collated by the Australian Industry Group (AIG) and Housing Industry Association (HIA), the construction rate was down 0.1 points to 43.2.
Readings below 50 indicate a contraction in activity, while readings above the 50 level indicate an expansion in activity.
AIG group director public policy Dr Peter Burn said poor market demand, reduced government building projects together with intense competition had been the cause of the slight drop last month.
"The disappointing results for the Australian PCI in August suggest that the construction sector is yet to bounce back from a distinct decline in performance since May,” he said.
Dr Burn said the decline of activity and new orders in the house building sub-sector are of “particular concern”.
The industry remains hampered by the failure of private demand to take up the slack left by the dwindling number of new public sector projects and the withdrawal of additional support for first home buyers,” Dr Burn said.
“In the commercial construction sector in particular, an inability to secure funding for projects is a key element in the shortfall in private demand," he said.
HIA chief economist Harley Dale said rising interest rates earlier in the year coupled with the on-going lack of available finance for development has contributed to the moderation in construction activity.
“If you add within this restricting environment the perennial supply side issues related to, for example, lack of affordable land and high taxation and regulation on new housing, it is difficult to envisage a short term turnaround," Mr Dale said.