Construction activity rises, but confidence stays subdued

4 January 2012

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4 January 2012 | Adam Leach

Faster growth in the construction sector last month was not significant enough to calm purchasers’ concerns over the sector’s short-term prospects.

The Markit/CIPS UK Construction PMI for December recorded a figure of 53.2 for December, extending the run of consecutive growth to 12 months. While the figure showed the sector grew more quickly than in November (52.3), confidence over the future remained weak.

The increase in activity came as purchasing managers in all three sub-sectors - housing, commercial and civil engineering - reported rises. It was the first time there had been unanimous growth in nine months. Civil engineering saw the fastest rise, while the residential sector increased at its slowest pace since December 2010. New business also grew for the third straight month, but at a slower rate.

The report indicated purchasing managers in the sector expect to see growth over the next year. However, this confidence was constrained by concerns over market conditions and client confidence.

Commenting on the findings, CIPS CEO David Noble said: “Despite the overall growth in construction output and relatively milder weather conditions, December’s PMI painted a mixed picture and therefore offered little to raise the spirits.

“Overall expectations for the coming year were generally hopeful, but continue to be skewed by wider economic uncertainties. Although there were modest increases in employment, it’s likely that many firms were hiring through necessity rather than optimism about any pick up in business in the next couple of months.”

Sarah Bingham, economist at Markit, said: “House building, commercial construction and civil engineering all saw higher activity in December. However, the sustainability of the overall rise in output remains uncertain, with confidence about the year ahead still relatively subdued.”

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