House building work picked up at the start of this year, but overall construction activity has continued to fall.
The Ai Group and Housing Industry Association Performance of Construction Index (PCI) rose 0.7 points to 47.7 points in January, from 47 points in December.
A level below 50 points indicates a reduction in activity in the sector.
Ai Group head of policy Peter Burn said the construction industry had started 2017 continuing the overall contraction that was evident for much of last year.
He said house building was the only subsector that had gained ground in January, with apartment, commercial and engineering construction all slipping further into contraction.
Dr Burn said a large chunk of the slowdown was due to the easing of mining investment-related activity and in residential building work, particulary apartments, after 2016's surges.
"While there is still a considerable amount of construction underway, including in transport infrastructure in the eastern states, overall levels of activity continue to ease," Dr Burn said in a statement on Tuesday.
"This further underlines the importance of encouraging growth across a broader cross-section of the economy."
The contraction in employment and deliveries subindexes slowed in January, but the activity and new orders subindexes' contraction gained pace.
House construction lifted to be slightly expanding, while the winddown in apartment building work slowed.
But, the decline of both commercial and engineering construction work continued to gain pace.
The wages and selling subindexes rose in January, while input prices fell but remained at an elevated level, keeping profit margins under pressure.
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