Two of the largest industries in Australia are deteriorating amid lower new orders. Experts predicted that the decline may continue further this year.
The Australian Industry Group (Ai Group) said the country's construction sector saw a downturn both in January and February and this trend could continue within the next couple of months, Business Insider Australia reported.
Ai Group also attributed the continuing decline to lower orders over the past two months. "With new orders also lower in February the construction downturn looks likely to continue over coming months," the group said.
According to data compiled by the agency, new orders for both houses and apartments dropped at the fastest pace in six years. Aside from softer orders in residential areas, new projects for commercial settings and engineering sects also deteriorated.
An economist at Australia's Housing Industry Association, Tom Devitt said the speed in which construction sectors are deteriorating is quite alarming. "The pipeline of building work looks to be shrinking at a concerning rate," he pointed out.
Even employment levels within the construction and services sectors have been contracting as revealed by February data. Activity levels in the services segment dropped early this year, igniting fears among economists and industry analysts.
Devitt noted that building activities in residential areas were a key driver in pumping the Australian economy for the past five years or so. However, due to a slowdown in this sector's activity, the economy may start relying on other industries that show potential.
Last month, a number of firms cut down on staffing levels due to weakening activity levels and lower orders on new projects. On the other hand, cutting down on the workforce was more prevalent in January than in February.
The reduced number of workers also prompted employers to ease up on salary increases in construction, services, and even manufacturing sectors. Analysts predict that employment growth with slow down further throughout the first half of 2019.
Meanwhile, Australia has fallen into "per-capita recession" as reported by multiple outlets on Wednesday. According to the Sydney Morning Herald, Shadow Treasurer Chris Bowen said the economy went backward for the only third time since 1991. He also stressed that the government has now "lost the moral authority to campaign and talk about the economy."
Reserve Bank Governor Philip Lowe confirmed that the Australian economy slowed down particularly during the second half of last year due to dropping housing prices and lower household wealth numbers.
