Construction activity continues to contract

3 November 2009

3 November 2009 | Jake Kanter

Activity in the UK construction sector slipped into further decline last month, according to the latest CIPS/Markit Construction Purchasing Managers' Index.

In the survey - where a figure below 50 represents contraction - the sector registered 46.2 in October, a drop from 46.7 recorded the month before.

The contraction was fuelled by a sharp decline in civil engineering activity, which fell from 42.4 in September to hit 40.8 last month. There was also further contraction in commercial activity in October.

In contrast, housing activity continued to grow, but remained well below historic averages.

The level of new orders was neutral in October, while employment activity fell for the 17th month in row.

Input prices increased for the first time in a year, with higher fuel costs and the weak pound contributing to inflated costs.

David Noble, chief executive of CIPS, said the results highlight the fragility of the sector. "Perhaps of most concern is the continued slashing of jobs at construction firms," he said. "The pace of job cuts actually accelerated in October as the current state of the sector means that many who have lost jobs will struggle to find something else before Christmas."

He added: "The only light at the end of the tunnel was optimism over future business prospects as purchasing managers said they expect workflow to rise due to improving economic conditions and marketing initiatives."

Further coverage of PMI reports is available here


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