CANBERRA, AAP – The construction industry continues to expand at strong pace, edging back only slightly from the record high in March and led by the home building and the engineering sectors.

The Australian Industry Group/ Housing Industry Association performance of construction index eased 0.8 points, but at 58.3 per cent in May it still indicates the industry is comfortably in expansionary territory.

Ai Group head of policy Peter Burn said new orders were growing strongly again in May.

“(With) the pipeline of infrastructure projects stretching over a number of years, there is a clear need for the industry and governments to move together to ensure there is adequate capacity in the sector and its supply chains to meet ongoing demand,” Dr Burn said.

Home building was one of the highlights in the latest national accounts which showed the economy grew by 1.8 per cent in the March quarter, lifting the annual rate to 1.1 per cent.

“The Australian economy today is bigger than it was going into the pandemic,” Treasurer Josh Frydenberg told reporters in Canberra on Thursday.

“But we know that the pandemic is still with us, and as long as the pandemic is still with us, the Morrison government’s support continues.”

He said the extension of the seven-day lockdown in Victoria was devastating and the Commonwealth government was still considering options to what additional support it might provide.

At this stage it is unclear what impact another Victorian lockdown will have on Australia’s economic recovery.

Addressing a Senate hearing on Wednesday evening, Reserve Bank deputy governor Guy Debelle said recent three-day lockdowns around the country had had little lasting impact on household spending and the overall economy.

“We will just have to wait and see. It is longer than three days clearly, but given it’s been one weekend, it’s too early to tell,” he said.

The initial seven-day lockdown was estimated by various organisations to cost Australia’s second-largest state between $700 million and $1.2 billion in lost business.

Addressing senators earlier this week, Treasury secretary Steven Kennedy said his department had previously forecast such a lockdown would cost the economy $100 million per day, so at the lower end of that range.

New Australian Bureau of Statistics figures for retail spending and international trade will show how the economy is shaping up for the June quarter, but precede the latest Victorian restrictions.

Economists expect April retail sales numbers to be much in line with the earlier preliminary result of a 1.1 per cent increase.

The April trade surplus is also expected to widen to $8 billion compared with $5.3 billion the previous month, buoyed by higher commodity prices, particularly for iron ore.