Construction growth improves, PMI shows

4 October 2010

4 October 2010 | Lindsay Clark

Expansion in the UK construction sector increased during September, although there is concern about prospects for the industry, according to the latest PMI report.

The Markit/CIPS Construction Purchasing Managers’ Index scored 53.8 last month, compared with 52.1 in August. An index score of 50 indicates no change in activity.

New contract wins, alongside work on existing projects, supported the latest expansion in activity, according to the report.

However, confidence in future business prospects was notably lower, and jobs were cut at the fastest pace in six months.

Slowing growth in new orders was also cause for a concern, said Sarah Ledger, economist at Markit and author of the UK construction PMI.

“Upon completion of existing contracts, activity may weaken,” she said.

“Residential construction is already falling, while strong commercial and civil engineering figures are likely to be benefitting, at least to a degree, from 11th-hour budget spending.

“Given the impending public sector cuts, funds are unlikely to be replenished to the same extent.”

CIPS CEO David Noble said: “While the construction sector is still growing, a sharp fall in confidence suggests work in the pipeline may not be so strong.

"Not since the onset of the recession have we seen optimism in such short supply.

“Commercial and civil engineering activity was on the up and contributed to overall growth. However, this may be only a temporary reprieve.

"Once the last of the public sector budget has been exhausted it is likely that we will see a negative impact from the inevitable cuts.”

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