Confidence builds in UK construction sector

2 February 2012

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2 February 2012 | Adam Leach

Despite an easing in the rate of growth, a report out today shows optimism in the UK construction sector hit its highest level since May 2011.

The Markit/CIPS UK Construction PMI for January reported a growth figure of 51.4 for the sector. The score is above the crucial no-change mark of 50 and showed activity expanded, but at a slower rate than December, which reported 53.2.

However, the easing in the rate of growth, which was attributed to a slowdown in new orders, stagnating employment and the completion of existing contracts, failed to dampen the spirits of the sector.

Confidence among construction companies hit the highest level since May 2011, making it the second most optimistic month since the measurement began. Spirits were buoyed by improving economic conditions and increased marketing opportunities. While input costs continued to rise, the rate of inflation eased.

CIPS CEO David Noble, said: “Buoyed by an increase in commercial activity, the continued growth in the construction sector in January was tempered by declines in housing and civil engineering. This resulted in a slower rate of expansion overall.

“It’s clear that many businesses have replenished their levels of optimism and have high expectations for improving economic conditions and new contracts. This confidence bodes well for the year ahead, although this visibility over potential new business will need to convert quickly into tangible work if employment levels are to improve.”

Markit economist Sarah Bingham drew a parallel between the high confidence levels in the sector and yesterday’s manufacturing PMI, which reported an eight-month high of 52.1. She said: “This [confidence level] suggests that growth may pick up again in the sector in coming months and, on top of the surprisingly strong start to 2012 reported by the sister survey of manufacturing, will raise hopes that a slide back into recession may yet be avoided.”

 


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