Building firms braced for bleak winter
Thursday 02 December 2010
Construction firms were braced today for a bleak winter after figures showed subdued levels of activity and a nine-month low for growth in new orders.
The latest Markit/CIPS Purchasing Managers' Index (PMI) survey - where a reading above 50 indicates growth - moved to 51.8 in November, slightly up from its eight-month low of 51.6 in October.
The industry reduced its workforce for the fifth month running and purchasing orders declined for the second month in a row, as projects were deferred or delayed by protracted negotiations.
David Noble, chief executive at CIPS, warned the industry will remain "stuck in a rut" until the economy recovers.
The figures are worrying because the construction industry has been a major factor behind the UK's economic growth this year.
The sector only accounts for 6.3% of GDP but was responsible for half of the 1.2% GDP growth in the second quarter and a quarter of the 0.8% GDP growth in the third quarter.
Howard Archer, chief economist at IHS Global Insight, warned "the economy will not be able to rely on a significant growth contribution from the construction sector going forward".
However, confidence about the future hit a five-month high although it remained well below pre-recession levels.
Mr Noble added: "In the short term, the prospects for the UK Construction sector look gloomy but confidence about possible recovery in the next 12 months has risen.
"Perhaps most concerning is the fall in employment levels, which reflects job cuts rather than a freeze on new hires."
Civil engineering projects returned to slight growth in the month but housebuilding recorded its third month of decline following 12 months of growth up to August. The strongest growth was shown by the commercial building sector.
The construction sector has now clocked up nine months of growth, as it rebounds from a massive contraction that saw it slip to 29.3 on the index in December 2008, its lowest score since the measure first started in 1997. Its growth peaked in May but slowed every month until November.
Construction figures saw a big leap in second and third quarters because they were compared with a deep recession the year before and the severe winter delayed works until the spring.
But the current trading environment is likely to remain challenging, with the government spending cuts likely to see civil construction projects shelved and the falling price of homes depressing the housebuilding market, added Mr Archer.
- 1 This restaurant has misunderstood the concept of 'cheese and biscuits'
- 2 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 The 'sex selfie stick' lets you FaceTime the inside of a vagina
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
PornHub turns masturbation into energy in bid to save the planet
Spiritual leader allegedly manipulated 400 men into removing testicles to be 'closer to God'
The 'sex selfie stick' lets you FaceTime the inside of a vagina
'This is what Islam tells us to do': A rare glimpse inside a Saudi Arabian prison – where Isis terrorists are showered with perks and privileges
New theory could prove how life began and disprove God
End of the licence fee: BBC to back radical overhaul of how it is funded
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...