Belief in UK construction sector returns

1 June 2009

02 June 2009 | Martha McKenzie-Minifie

Confidence in the UK construction sector has jumped to its highest level in 21 months, the latest Purchasing Managers' Index (PMI) shows.

In the CIPS/Markit Construction PMI - in which a figure below 50 represents contraction - business expectations, or confidence, recorded 72.6 last month. It was up from 56.4 in April and 58.4 in May last year.

Overall, the sector's rate of contraction was slowing, with a headline figure of 45.9 in May, compared with 38.1 in April and 43.9 in May last year.

CIPS director of professional practice Roy Ayliffe said the UK construction economy had appeared to be in freefall in February but the new numbers suggested "some signs of life".

"This data suggests that, while the construction sector may be out of the intensive care unit, it's still some way from making a full return to health and there is always danger of a relapse," he said.

Markit senior economist Paul Smith said the sector was hit "particularly hard" by the credit crisis but the underlying trends in the key demand and activity figures were "now upward". He said the record points increase in the Housing Activity Index was "particularly eye-catching".

The report found, however, that job losses - seen throughout the past year - continued.

Average prices paid by UK construction firms fell in May for a seventh successive month and at the second-steepest rate in the survey's history. Meanwhile, companies reported suppliers were reducing charges in response to falling demand.

SMjun2009

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