UK construction: Growth remains ''sluggish''

2 December 2010
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2 December 2010 | Angeline Albert

Clients’ deferring of spending decisions has limited new business opportunities in the building sector, the Markit/CIPS UK Construction Purchasing Managers’ Index found.

Data for November showed a further increase of activity in the UK construction sector but growth remained weak when compared to past performance. Jobs continued to be cut at a marked rate and confidence is still historically low.

The PMI posted 51.8 in November, a slight improvement on October’s 51.6.

Many construction firms indicated that conditions remained challenging, with new contract wins limited.

Optimism over future business prospects improved and confidence is at its strongest level in five months, but is still historically low.

Sarah Ledger, economist at Markit said:“New contract wins were restricted by lengthy negotiation periods and deferred spending by clients. Expectations for business activity over the coming year did rise in the month, although confidence remained below pre-recession levels.”
CIPS CEO David Noble said:Growth in order books continues to be sluggish as projects are delayed and this is impacting on purchasing activity. Perhaps most concerning is the fall in employment levels reflects job cuts rather than a freeze on new hires.

“The house-building sector in particular continues to suffer as a weaker housing market makes builders nervous about committing to large new building projects and competition is rife. Purchasing managers say that growth in the current month was reliant on commercial and civil engineering – yet uncertainty remains about the impact of public sector spending cuts.”

Noble said that the sector would “remain stuck in a rut” until the economy as a whole strengthens.

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