Construction sector grinds to halt

Britain's construction sector barely grew during September after new orders fell for the first time in 19 months, figures showed today.

The Markit/CIPS Purchasing Managers Index fell to 50.1, from 52.6 in August, a figure that indicates growth in the sector has all but ground to a halt.

Markit said a slowdown in new orders was behind the lower output and added that in some areas projects were also being cancelled or delayed because of weak client confidence.

Both housing and civil engineering output fell in September, according to the survey, though commercial output increased.

Sarah Bingham, an economist at Markit, said companies were relying on work on existing contracts to support output.

The Markit survey mirrors recent official Government figures that showed new orders fell by 16.3% in the second quarter of this year to their lowest level since 1980.

Howard Archer, chief UK economist at IHS Global Insight, said September's performance was the weakest so far this year and adds to overall growth concerns, although construction activity only accounts for 6.3% of GDP.

He said that one ray of hope was the Government initiative to boost house building through a release of state-owned land under a "build now, pay later" scheme. Up to 100,000 new homes are expected to be built under the scheme.

Markit's survey showed residential house building declined for the fourth month running in September and at the fastest rate for nine months.

Government spending cutbacks also hit civil engineering construction work after school and hospital projects were scaled back.

There was a slight rise in construction employment in the month and input costs fell at the fastest rate for more than two and half years, but Markit said confidence for the future still remained subdued.