Tough times continue for construction industry

3 March 2009

03 March 2009 | Martha McKenzie-Minifie

The UK construction sector contracted sharply last month, indicating tougher operating conditions for the industry.

According to the latest CIPS/Markit UK Construction Purchasing Managers' Index, where a figure below 50 represents contraction, activity in the sector fell to 27.8 in February. This was a record low for the survey. The figure was 34.6 a month earlier and 57.3 in February 2008.

CIPS director Roy Ayliffe said the data was "abysmal" and put paid to any hopes of improvement following a slight rise in the index in January. "February data from the UK construction sector marks a whole year of decline in the industry," he said.

The latest data showed output declined at a faster rate across all three monitored sub-sectors - housing, commercial and civil engineering. Optimism for the future also fell to a historic low.

New orders dropped to 33.2 last month from 34.3 in January, with companies reporting fewer enquiries and opportunities to tender, and reduced success rates on submitted bids. The report said employment and subcontractor use dropped, while construction firms dropped their charges.

Buyers noted cuts to their input prices, attributed in part to weaker demand for fuel and raw materials pushing down costs.

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

SMmar2009

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