Construction activity rises to 7-month high

Published 06th May 2009

Britain’s construction industry contracted at its slowest pace in seven months in April, as the weak pound helped to support new orders, according to the latest survey of purchasing managers by CIPS/Markit.

The purchasing managers’ index improved to show that activity had risen from a reading of 30.9 in March to 38.1 in April - its highest level for seven months. However, it is still below 50, the level that separates expansion from contraction.

Activity in housing, commercial construction and civil engineering output all rose on the previous month. Prices of materials continued to fall sharply although this was countered by the fact that construction companies had to cut their prices to try to generate business.

Employment continued to contract sharply in the construction sector in April, but the rate of decline was less than the record high seen in March.

Rob Ayliffe, director at the Chartered Institute of Purchasing & Supply, which commissioned the survey, said: "The darkness that has been gathering over the construction economy for the past 13 months lifted slightly in April, but blue skies are still a long way off."

Howard Archer, chief UK and European economist of Global Insight, said: "The survey adds to recent growing signs that the rate of UK economic decline could now be moderating. Encouragingly, new orders contracted at the slowest rate for eight months in April, while business expectations climbed to a ten-month high.

"The construction sector is being helped to a limited extent by the Government, which is bringing forward some infrastructure spending as part of its efforts to boost the economy. There are also growing signs that housing market activity has passed its low point. However, it is hard seeing the sector returning to growth any time soon.

He added: "This further reinforces belief that GDP contraction will be markedly less in the second quarter than the 1.9 per cent quarter-on-quarter drop seen in the first quarter, although it should be borne in mind that the construction sector only accounts for 6 per cent of total output."

Source: ' Times '

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