Activity in the construction industry contracted for a fourth consecutive month, new figures show from the Australian Industry Group/Housing Industry Association Performance of Construction Index.
The index fell in September to 40.8 points, well below the 50-point level separating contraction from expansion.
The survey found that companies were concerned about interest rates, credit conditions and the decline of the government's school building program.
"Construction companies continue to be plagued by weak market demand and on-going delays in project starts as private demand struggles to fill the gap left by the drying up of projects funded by fiscal stimulus measures," says AIG director of public policy Peter Burn.
"The weakness across the construction industry in September and the discouraging near-term outlook reflected in low levels of new orders provides further evidence that the decision of the Reserve Bank not to raise interest rates was appropriate.
"Higher interest rates would be a further setback for the industry which is already suffering from a lack of demand and is trimming its labour force accordingly."
