Recovery is expected.

UK construction shrinks for 22nd successive month

Published:  06 January, 2010

LONDON: December data pointed to a further contraction in UK construction activity, extending the current downturn into its 22nd successive month.

Despite the continuing recession and a further cut in employment, construction companies remained confident of recovery this year.

Subdued demand was the main factor underlying reduced activity, as levels of new business, which some companies report are still at low levels, fell slightly during the month according to the Construction Purchasing Managers' Index.

David Noble, chief executive, of the Chartered Institute of Purchasing & Supply, said: "December was another disappointing month for the UK construction sector. Unlike other parts of the economy, it seems unable to escape the shackles of the recession, as it entered its twenty-second successive month of decline.

"Purchasing managers painted a bleak picture as firms suffered from reduced client demand and falls in new business. As a result, contractors are competing aggressively to secure the relatively fewer new contract tenders there are in the market."

Residential construction activity grew the fastest since August 2007 but further declines occurred in the commercial and civil engineering sectors,

Despite the sustained contraction in activity, optimism over future business conditions rose in December. Anecdotal evidence suggested that an anticipated recovery in the industry during 2010, particularly within the housing market, would result in higher demand, the survey said.

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