The construction sector remains under a cloud as Australia suffers its first recession in nearly 30 years, although new figures show the pace of contraction in the industry has slowed.
The Australian Industry Group / Housing Industry Association Australian performance construction index rose 7.2 points in July.
But at 42.7 points, it remains below the 50-point mark that separates expansion from contraction.
AI Group head of policy Peter Burn said further falls were recorded for residential building and commercial and engineering construction.
“An encouraging sign was that the pace of contraction slowed markedly overall with only the apartment building sector slumping at a fast pace in July,” Mr Burn said on Wednesday.
However the sudden tightening of restrictions on Victorian construction will have an impact across the country.
“(They) will have particularly severe consequences for activity, employment and on many businesses that supply the construction sector in Victoria,” Mr Burn said.
Home lending figures for June to be released on Wednesday are expected to show a two per cent decline after tumbling 11.6 per cent in May.
The Reserve Bank of Australia left the case rate at a record low 0.25 per cent for another month after a board meeting on Tuesday.
RBA governor Philip Lowe concedes charting the economic outlook is difficult in the face of the coronavirus but the central bank expects unemployment to rise to about 10 per cent by the end of the year.
This would be the result of locked-down Victoria suffering further job losses and more people elsewhere in Australia seeking work.
Dr Lowe expects the unemployment rate to gradually decline to around seven per cent over the next couple of years.
Two weeks ago, Treasury forecast a year-end jobless rate of 9.25 per cent, compared with 5.1 per cent before the pandemic.
Since then, Victoria has imposed tougher restrictions in its attempt to stifle the virus.
The central bank will shed further light on the economic outlook in a quarterly statement on monetary policy later this week.
Australia’s banking and company watchdogs will both face the House of Representatives economics committee on Wednesday.
The Australian Prudential Regulation Authority and Australian Securities and Investments Commission will have their annual reports scrutinised.
“It is essential to maintain strong prudential regulation and ensure fair and transparent dealings to safeguard financial stability and consumer trust in the financial sector,” committee chair Tim Wilson said.