Ongoing poor demand driven by consumer pessimism again restricted activity with the index 2.2 points weaker, recording 32.6 for the month.
Released by Australian Industry Group, the July index revealed the new financial year had done little to stimulate optimism.
Commercial construction in particular exhibited continued fragility.
The index also showed interest rates cuts had yet to translate into an improvement in house building activity.
Australian Industry Group director of public policy Peter Burn lamented the current situation.
"Despite recent interest rate cuts the construction industry remained in the doldrums in July with the ongoing slumps in commercial and housing construction the biggest drags on activity,” he said.
Burn said although there were some bright spots, such as an easing in the rate of decline in apartment construction activity and a pickup in the engineering construction new orders sub-index, he remained concerned.
“[There were] two bright spots in July … however, with new orders and employment levels across the industry continuing to fall, the new financial year has brought little to cheer about.”
This article first appeared in ILN's sister publication ConstructionIndustryNews.net.