Construction sector suffers sharp decline
Tuesday 03 July 2012
The UK's construction sector suffered its sharpest contraction in two-and-a-half years in June, dealing a further blow to the UK's recovery hopes.
The Markit/CIPS survey, where a reading above 50 represents growth, showed overall activity in the sector fell to 48.2 in June from 54.4 the previous month - representing its biggest monthly fall since February 2009.
The Queen's diamond jubilee and bad weather played a part in the decline but the survey also revealed weaker underlying business conditions, the lowest confidence levels since October and the first fall in workforce numbers since February.
Civil engineering and housebuilders were the worst performing sectors, with both seeing a drop in output for the first time since January, while commercial activity increased at its slowest pace for 28 months.
Howard Archer, chief European and UK economist at IHS Global Insight, said: "The construction purchasing managers' survey for June was substantially weaker than expected and hugely disappointing."
Output fell to its lowest level for two and a half years, while new work contracted for the first time in eight months.
The weaker construction data will come as a blow to hopes that the UK can pull quickly out of its current double-dip recession.
Official data showed a nearly 5% contraction in the sector in the first quarter of 2012, which has been at odds with the Markit surveys that have until recently shown the sector to be much more resilient.
Blerina Uruci, an economist at Barclays, expects the sector to fall 3.4% in the second quarter, adding that the Markit survey reflected the poor performance of the housing market and falling levels of Government infrastructure spending.
CIPS chief executive David Noble said: "The anomaly of the double bank holiday at the start of the month will have had some negative impact but the underlying sluggishness throughout the industry could point towards a much softer period heading into the third quarter."
The weak data will ramp up expectations that the Bank of England will order an increase to its quantitative easing programme later this week in a bid to boost the economy.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...