Bad weather shrinks construction

5 January 2011

5 January 2011 | Lindsay Clark

Nine months of growth in the construction sector came to an end in December, as the bad winter weather caused the sector to contract.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) posted 49.1 in the last month of 2010, falling from 51.8 in November. A score of 50 indicates no change.

New order growth accelerated slightly, however, and many firms said poor weather conditions were reducing activity.

Sarah Ledger, economist at Markit and PMI author, said: “A modest rise in new business suggested that particularly poor weather had acted to reduce activity. Nonetheless, growth has been subdued in recent months, largely due to contractions in residential construction, signalling that business conditions in the sector were not conducive to a large overall expansion in activity.”

Confidence regarding future business prospects remained relatively weak, the PMI showed. CIPS chief executive David Noble, said: “The overall picture for 2011 is likely to stay subdued.”

While confidence about future activity rose in December, this was at a slower pace than the previous month, he said.

"A major worry is the situation in the housing market, which suffered its steepest decline in activity for 20 months,” Noble said.

UK construction companies reported a marginal reduction of purchasing activity in December, the PMI found. This was the third consecutive decrease in input buying, although the least severe of that period. Suppliers’ lead times lengthened markedly as unseasonally poor weather and low stocks at vendors delayed deliveries, the report said.

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