Construction sector activity on a 'knife edge'

1 July 2009

02 July 2009 | Jake Kanter

Improvement in construction sector activity retreated slightly last month, contracting at a faster rate than in May.

According to the latest CIPS/Markit UK Construction Purchasing Managers' Index - where a figure below 50 represents contraction - the industry recorded 44.5 in June, compared with 45.9 the month before.

The figure was still an improvement on the 38.8 recorded in June last year.

The rate of decline accelerated in both housing and commercial activity, as the economic downturn continued its strangle hold on the industry.

The level of new orders and employment also fell at a faster rate in June.

CIPS chief executive David Noble said: "Against the backdrop of difficult market conditions the UK construction sector is on a knife edge. After the improvements seen in April and May, the sector has retracted as firms battle to consolidate their position in the tough market. This data adds to speculation of a 'w-shaped' recession."

Civil engineering posted a slight improvement as contraction slowed from 44.5 in May, to record 45.7 last month. The sub-sector has been most resilient to the financial crisis.

Input prices contracted at a slightly slower rate last month, but were still significantly lower than at the same time last year.

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

SMjul2009

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