Member Article

“Little to be positive about” in construction

UK Construction is still in decline, according to the latest Markit/CIPS UK Construction PMI.

Output and new business levels fell, however employment in the sector was relatively resilient in September.

Cost pressures burdened companies, particularly given inflation reaching a six-month high, and low stocks at suppliers caused prolonged lead-times for raw materials.

Overall, the Index posted 49.5% in September, up fractionally from 49% in August, but below the 50% no change mark for the second month running.

Residential building proved the worst performing area of the sector, continuing a trend seen throughout most of the year.

Commercial activity also dropped during September, at the fastest rate for just over two-and-a-half years.

These declines were partially countered by a return to growth in civil engineering, which was the first rise in four months.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI said: “UK Construction PMI data for September presents another bleak assessment of business conditions in the sector. The current stretch of falling new orders is now the longest seen for three years, reflecting shrinking underlying demand alongside delays in spending from both public and private sector sources.

“A lack of new projects meant that confidence in the business outlook remains close to its lowest since the UK economy nose-dived into recession during 2008.”

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “September’s figures show the construction sector’s cupboard to be well and truly bare, rounding off a disastrous quarter. After the longest continual decline in new orders for three years, this is of no surprise.

“Looking ahead, there is little to be positive about. Homebuilding continues to be hit hard, the commercial sector, so long the star of the industry, has lost its sparkle. That civil engineering has seen a moderate increase in activity, is scant consolation.

“This continued poor performance has been compounded by an increase in input prices reflecting rising cost pressures across the global economy. All of this, points to an ominous future. In the absence of investment of some kind, we are likely to see this level of activity continue for some time, or possibly even drop further.”

This was posted in Bdaily's Members' News section by Tom Keighley .