Construction activity growth eases in September

3 October 2006
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04 October 2006 | Rebecca Ellinor

Activity in the UK construction industry is continuing to grow but at a weaker rate than August.

The seasonally adjusted CIPS purchasing managers' index (PMI), where a reading above 50 indicates growth, recorded total construction activity at 53.6 in September, compared with 54.5 in August.

Growth was driven primarily by increased work on commercial projects. More than 27 per cent of panellists reported that work on commercial projects had risen since the previous month, while 20 per cent recorded a decline. The commercial activity index recorded 54.8, compared to August's figure of 57.5.

Housebuilding showed little change from the previous month, with a figure of 50.1.

The civil engineering activity index fell to 47.0, indicating a decline in work on civil engineering projects for the first time since June.

Success in winning tenders and acquiring new contracts led to a further rise in UK constructors' new business levels during September.

However, the increase in new orders was weaker than in August, when volumes of new work rose at the fastest rate for nine months. The new orders index recorded 54.1, compared to August's 56.7.

Builders took on more staff for the third month running as they sought to cope with new orders. The index came in at 55.2 compared to August's figure of 53.0.

Input price inflation remained strong in September, despite easing to a four-month low. Anecdotal evidence suggested that costs were driven higher by increased metal prices, in particular copper and steel. The index recorded 69.0 for September as against August's index of 72.1.

UK constructors' confidence regarding future business prospects reached a five-month high in September, recording an index of 75.7.

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