Construction industry grows for first time since 2008

6 April 2010

6 April 2010 | Allie Anderson

Activity in the UK construction industry showed tentative signs of recovery last month as it expanded for the first time in more than two years.

According to the latest CIPS/Markit Construction Purchasing Managers’ Index (PMI) – where a figure above 50 represents growth – total activity registered 53.1 in March, rising from the previous month’s reading of 48.5.

Commercial construction also increased during March to 53.9, up from February’s figure of 48.0, with growth reported for the first time since February 2008. There was growth in the housing sub-sector, while activity in the civil engineering sub-sector contracted.

New orders also rose for the first time in four months, with construction purchasers attributing the increase in new business to tenders becoming increasingly successful. But tendering opportunities remained low in comparison with pre-recession levels.

Purchasers reported that suppliers’ delivery times lengthened as they were unable to meet increased demand, and there were also shortages of certain items.

CIPS CEO David Noble warned that although the results were positive, “this upturn may be short-lived”. “While overall industry improvement was bolstered by private sector expenditure, it’s worrying to see civil engineering contracting, given that mooted public sector spending cuts are yet to kick in,” he said.

“Dwindling headcounts as firms laid off staff at a quicker pace, coupled with weakened confidence about future business performance, suggests that the construction industry still has some concerns over the stability of the recovery.”

Further coverage of PMI reports is available here.

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