Construction shows some signs of recovery

5 May 2010

5 May 2010 | Lindsay Clark

UK construction activity increased during April for a second successive month, and at the strongest rate since September 2007, according to the latest data.

For April, the CIPS/Markit Purchasing Manager’s Index (PMI) for construction posted 58.2 for purchasing activity in the construction sector, rising from the previous month’s reading of 53.1. A score above 50 indicates growth.

Growth came from house building, which is increasing at the fastest pace since August 2007, and commercial building. However, the civil engineering subsector continued to contract during the month. The sector as a whole is emerging from a 24-month recession.

Despite the marked rise in activity, UK construction companies reported a further reduction in employment during April. Falling staffing levels have now been sustained for 23 successive months, although the latest reduction was the weakest since August 2008.

David Noble, chief executive of CIPS, said: “It’s encouraging to see the construction sector show signs of recuperation for the second month running and suggests that the whole UK economic recovery has real substance. Though the industry is moving in the right direction, we mustn't be lulled into complacency as growth is coming from a very low base and operating conditions are still very difficult.

“While purchasing managers noted a growing appetite for new contracts – especially in the housing and commercial sub-sectors – civil engineering is still a sore spot with little activity. Looking forward during election week, it’s a worry considering what impact post-election spending cuts and rising input-price inflation might have on the sustainability of the sector’s recovery.”

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