Construction activity continues to decline

4 February 2013

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4 February 2013 | Adam Leach

Output in the UK construction sector declined for the third month running in January as housing and civil engineering activity continued to ease off, according to a report.

The Markit CIPS UK Construction PMI for January recorded a figure of 48.7 – a figure below 50 indicates a drop in activity. The rate of decline matches the six-month low recorded in December’s survey. The drop in civil engineering activity was the first since August - but the decline in housing, while negative, was at the slowest rate for three months. Activity in the commercial sector was unchanged.

New business declined for the eighth straight month, albeit at a slower rate. Order volumes dropped and the survey indicated a decline in the quality of supplier service, with delivery times lengthening to the greatest degree in three months. Cost burdens rose, but at a slower rate than in December.

But despite the negative findings of the survey, buyers in the sector are more optimistic about the future, with the confidence among respondents improving.

Tim Moore, senior economist at Markit, said: “January’s survey results are yet another indicator of the severe underlying fragility across the UK construction sector, with output failing to rise in any of the three monitored sub-sectors for the first time since last summer. Snowfall at the start of the year may have disrupted output to some degree, but unfavourable weather outside is clearly far down the long list of difficulties afflicting construction companies at present.”

David Noble, CEO at CIPS, said: “Snow compounded difficult economic conditions to ensure the construction sector’s winter blues continued into January. Yet against expectations, businesses have a spring in the step looking ahead to 2013. This new-found confidence has been buoyed by news of public investment, but it could be found wanting.”

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