2012 'year to forget' as UK construction sector contracts

4 December 2012

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4 December 2012 | Anna Reynolds

The Markit/CIPS UK Construction PMI for November dropped from 50.9 in the previous month to 49.3, below the 50.0 no-change mark for the third time in the past four months.

New business orders fell at the steepest rate since 2009 and jobs were cut again in November, at the fastest pace for almost two years. Lower new order volumes have now been recorded for six months running, which has coincided with a significant drop in confidence in the outlook for the year ahead.

Lower levels of activity were driven by reductions in house building and commercial activity. Residential building has now dropped for six consecutive months, while civil engineering activity has continued to increase for the past seven months.

Lead times from suppliers continued to lengthen and, on average, supplier performance has deteriorated each month since September 2010.

Construction companies indicated that input price inflation has eased only slightly from the 10-month high recorded in October.

CIPS CEO David Noble said: “Parallels to darker days of the economic crisis can be seen in the construction sector, which is under pressure from all sides. Businesses are now set for a bitter end to 2012 with little hope of respite in the new year.

“Jobs have been slashed in response to the fastest fall in new orders for over three-and-a-half years, confirming the sector’s return to contraction and the lowest levels of confidence seen since the height of the economic crisis in 2008.”

Tim Moore, senior economist at Markit said: “A protracted decline in workloads, the double-dip UK recession and shrinking investment spending has made 2012 a year to forget for the construction sector.”

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