Slump in house building slows construction growth

2 September 2010

2 September 2010 | Lindsay Clark

Reduced growth in house building is weighing down the UK construction sector, which is experiencing a slowdown in expansion for the third consecutive month.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) for August, out today, found that while confidence improved, concerns over public sector spending cuts remained. The overall construction PMI fell to 52.1, which is above the crucial 50 no-change mark, but weaker than July’s reading of 54.1.

CIPS CEO David Noble, said: “Those who are looking for signs of a slowdown will find plenty to worry about in August’s construction PMI. The most disturbing is the marked slowdown in the residential sector, because this is where much of the recent growth has come from.”

“The slight increase in public sector activity disguises continuing uncertainty about the scale of spending cuts that we have yet to experience,” he said. “Employment levels falling for a second successive month will cause deep concern, not least for the ripple effects they may have on other sectors.”

The construction PMI is now more than six points lower than May’s recent high, said Sarah Ledger, economist at Markit and author of the UK Construction PMI.

Despite the growth in the survey’s measure of positive sentiment among UK construction purchasing managers, it remained subdued in the context of historical data, said Ledger.

“As a result, staff numbers fell for the second successive month, with companies displaying caution with regard to hiring,” she said.

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