UK construction growth slows

5 January 2006
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05 January 2006 | Rebecca Ellinor

Although the UK's construction industry continued to grow in December, it did so at its slowest rate for seven months.

The result was revealed in the latest CIPS Purchasing Managers' Index (PMI) - a seasonally adjusted index designed to measure the overall health of the construction economy in which a figure above 50 indicates growth.

The overall figure was 52.6 - a drop on November's index of 54.2.

For the third consecutive month, commercial building was the only one of the three sub-sectors - which also include housing and civil engineering - to register a rise in activity. However, its overall figure of 54.1 still represented a fall on November's 56.6 index.

House building was down for the third month in a row, with an index of 49.6. The weakest performing area was civil engineering, which fell to 47.4.

The seasonally adjusted new orders index registered 54.4. While this still represents a rise, the report said it was the least noticeable increase for 41 months amid reports from some firms that they had experienced a drop in enquiries from clients and confirmations for projects.

Employment growth continued for the 81st successive month despite the dip, although the rate of hiring slipped to its weakest for five months.

The volume of building materials bought also grew but again at a more modest rate. The quantity of purchases index registered 51.2.

Lead-times continued to increase and input costs rose to an 11-month high with the industry particularly noting rises in the price of oil, steel and copper.

However construction firms remained positive about the outlook for the next 12 months, with the future business activity index unchanged from the previous month's figure of 75.1.

Roy Ayliffe, CIPS director of professional practice, said confidence was "driven by strong demand for construction work and capacity expansion plans".

SMjan2006

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