Construction slump starts to level off

Published 02nd Dec 2009

CIPS purchasing survey shows UK construction industry declining for 21st straight month but housebuilding expands


Activity in Britain's flagging construction sector contracted for the 21st month in a row in November, although the rate of decline appeared to be easing.

The Chartered Institute of Purchasing & Supply's purchasing managers' index rose to 47 in November, from 46.2 in October, the smallest contraction since August. A mark below 50 signifies contraction as opposed to growth.

David Noble, chief executive at CIPS, said: "There is little festive cheer for the UK construction industry, which still remains very vulnerable. Despite a slight boost in volumes of new business, construction firms are still feeling the effects of the worst economic landscape seen in over a decade.

"Twenty-one months of continued decline has hit the industry incredibly hard – as highlighted by another round of job cuts this month. One positive is that the sector is not contracting as sharply as it was this time last year and purchasing managers are remaining upbeat about future business conditions," he said.

"A broader economic recovery will improve the sector's outlook. However, it appears we are still some way off from returning to growth, let alone reaching the level it was at only two years ago."

Activity in the commercial and civil engineering subsectors declined in November but there was some good news as residential construction expanded for the third successive month. New business also increased marginally in November – the first rise in new order volumes in 21 months – as targeted marketing and the completion of contract negotiations supported growth.

Howard Archer, chief UK economist at IHS Global Insight, said: "While the worst of construction's contraction is clearly over, recovery remains elusive. Serious concerns and uncertainties persist over the prospects for the commercial property sector in particular.

"Over the long term, the construction sector will be hit by the government's need to significantly rein in its spending for an extended period as this is bound to hit expenditure on infrastructure and public buildings."

Source: ' Guardian '

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