Construction growth struggles as confidence remains low

4 May 2011

4 May 2011 | Lindsay Clark

UK construction growth slowed sharply in April as a result of weaker housing and civil engineering markets, according to a purchasing managers’ survey.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) dropped three points from 56.4 in March to 53.3 in April, but was still above the 50-mark, which indicates an increase in activity.

In contrast to housing and civil engineering, the commercial sector recorded an accelerated rise in activity.

David Noble, CIPS chief executive, said: “While growth in the construction sector has lost its pace compared to the start of the year, the PMI figures indicate that the situation is nowhere near as sluggish as latest Office for National Statistics (ONS) figures suggest.”

In April, the ONS found that the construction sector contracted during the first quarter of 2011.

Overall the PMI showed new orders continued to rise, supported by the commercial sector, which benefited from an increase in activity elsewhere in the economy, Noble said.

“Low activity levels in the housing market, tighter government purse strings, rising input prices in fuel and materials, as well as poor cash flow in some cases, are clearly a worry and confidence among UK constructors remains at a historically low level as the number of jobs continues to drop,” he said. “However, business sentiment improved slightly compared to March. This partly reflects expectations that growth in the wider UK economy will help support construction activity going forward.”

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