Signs of stability in building trade

Confidence and activity in the building trade seems to have stabilised, according to the latest survey from the Chartered Institute for Purchasing and Supply (Cips), but the severe weather conditions will threaten the sector's slow recovery.

The Cips index rose slightly in November to 51.8 from 51.6, against expectations of a small decline. Any reading above 50 represents expansion, and civil engineering is leading what growth there is. House building activity, by contrast, contracted in November for a third month running, after a year of continuous recovery.

The data suggests that the sizeable boost given to the wider economy from the construction recovery may not be sustained for much longer.

Even so, an improvement in the business expectations index by 2.7 points to 60 suggests there will still be some contribution to GDP growth in 2011.

Howard Archer, the chief UK Economist at Global Insight, said: "It is very clear that the economy cannot rely on a major contribution from construction going forward.

"Construction activity will be hit appreciably by the Coalition Government's extended pruning of public spending as this is clearly going to hit expenditure on public buildings... and housing market activity has been moribund in recent months," he added.