Bad weather blamed for construction sector woes

3 April 2013

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3 April 2013 | Anna Reynolds

Activity in the UK construction sector continued to fall last month, according to the latest Purchasing Managers’ Index (PMI).

The Markit/CIPS UK Construction PMI for March recorded a figure of 47.2, up slightly from February’s figure of 46.8, but still below 50, indicating a decline in activity.

The unusually bad weather conditions last month are thought to have contributed significantly to lower output. Civil engineering was the worst performing sub-sector, with the pace of contraction the fastest since October 2009. Commercial activity decreased for the seventh time in the past eight months. But residential construction bucked the overall downward trend, with activity rising at the most marked pace since May 2012.

CIPS CEO David Noble said: “While the government’s focus on housing appears to have had a positive effect as it outperformed other sectors, civil engineering is a different story. Here, the lack of public spending has resulted in the fastest rate of contraction since October 2009. At the same time, the commercial sector is doing little to pick up the slack and experienced its second weakest reading in 39 months.”

Meanwhile, new business orders fell for the tenth consecutive month, resulting in a reduction in employment during March. The fall in staffing levels was the first in 2013. Supplier delivery times lengthened again, reflecting low stocks and reduced capacity among vendors.

Despite this, construction companies forecast a rise in output over the coming year, in the hope capital spending will grow. The increase in confidence in the sector was the highest for 11 months.

Tim Moore, senior economist at Markit, said: “Shrinking investment spending and intermittent output disruptions amid unusually bad weather kept the UK Construction PMI entrenched in contraction territory at the end of the first quarter. The negative print for construction output mirrors that seen for manufacturing and now leaves the service sector as the last great hope for avoiding another slide in UK GDP.”

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