Australian construction activity has fallen to its lowest level in almost two and a half years, largely due to a lack of new work and tender opportunities, a report shows.

The Australian Industry Group-Housing Industry Association’s performance of construction index (PCI) fell four points to 32.1 in August.

It was the 15th consecutive monthly fall for the index. Readings below 50 indicate a contraction in construction activity.

The report said this was due to a sharp fall in new orders, together with weak activity across all major sub-sectors of the index.

“The prolonged downturn in the construction sector is detracting from current levels of activity across the broader economy through its impacts on manufacturing and service related industries linked to the sector,” Australian Industry Group’s Peter Burn said.

“Construction employment has also been falling for some time and this too is being felt across the broader economy, as households reliant on wages from this important sector cut back on their spending.”

The four broad sectors of the construction industry continued to register falls in activity, with apartment and commercial construction recording the sharpest declines in the month.

New orders declined for a 15th straight month and at the steepest rate recorded since the inception of the survey in September 2005.

Housing Industry Association chief economist Harley Dale said stimulus measures were urgently needed to prevent a big fall in building activity, as was seen during the global financial crisis.