More growth in construction sector

Britain's construction industry grew again in June, figures revealed today, though uncertainty over the economy sent confidence to its lowest level for six months.





The Markit/CIPS Purchasing Managers' Index, where a reading of more than 50 represents growth in construction activity, slowed slightly to 53.6 in June, from 54.0 in May, but was still above market forecasts of 53.5.



Commercial construction slowed but remained the strongest performing sub-sector, civil engineering rallied from a weak May, though house building fell for the second time in three months.



Employment also decreased over the month, the survey said, as the number of new orders slowed, while confidence slumped from a 12-month high in May to the lowest since January as concerns grew over the availability of public and private sector finance.



Sarah Bingham, economist at Markit, said: "June data rounds off a further solid quarter of growth, albeit down on the first quarter. This contrasts with the surprising weakness seen in the official data for the first three months of the year."



She added: "The worry is that the level of business confidence has fallen to a six-month low in the sector, which suggests that companies are expecting growth to weaken over the next 12 months."



Howard Archer, chief economist at IHS Global Insight, said that while the construction PMI points to clear growth, there are indications in the survey that the sector is losing momentum.



"This is obviously unwelcome news, particularly given that the survey evidence on the construction sector has tended to be significantly healthier than the hard data in recent months," he added.



Construction makes up about 7% of the total economy and has been one of the most volatile areas of the economy in recent quarters, swinging from strong growth in the middle of last year to contraction in the last quarter of 2010 and first quarter of 2011.

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