Construction sector declines for first time in six years

1 April 2008
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02 April 2008 | Paul Snell

Construction activity contracted for the first time in six years last month, as economic uncertainty hit the sector.

Figures from the latest CIPS/NTC Purchasing Managers' Index report on the sector saw the index fall below the critical no-change mark of 50 for the first time in 76 months. The index recorded a mark of 47.2 in March, the first sub-50 figure since November 2001.

Housing and commercial activity both contributed to the decline, recording figures of 41.1 and 45.4 respectively. Activity in civil engineering continued to expand, posting a mark of 54.4 in March, although this was a slowdown compared with 59.4 the month before.

New orders also fell at a record rate, the first decline since October 1998, to 48.9. Evidence suggested companies were postponing planned developments with the uncertainty of weak economic conditions.

However staff levels actually increased in March, with buyers saying this reflected new projects being started. The employment index posted a figure of 52.4 showing slight growth in staff levels.

Strong input prices also continued to affect the sector, reaching their highest level for 40 months. The rise in the cost of fuel and metal pushed the figure to 74.4 in March, compared with 73.2 in February.

* Further coverage of PMI reports is available at http://www.supplymanagement.com/pmi



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