UK construction activity expanded for second consecutive month

Published:  05 May, 2010

UK: Construction activity increased during April for a second successive month, and at the strongest rate since September 2007. The seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index (PMI) posted 58.2, rising from the previous month’s reading of 53.1.

Sarah Ledger, economist at Markit said: “Growth of the UK construction sector was sustained for a second consecutive month in April, with increased activity in both the residential and commercial construction sub-sectors arising from improved new contract wins. However, reflective of the impact of the twenty-four month recession in the industry, employment is yet to rise.

“Nonetheless, optimism over future business prospects continued to improve, despite sustained concerns over potential cuts in government spending. This suggests that growth in private business may help to offset any impending weaknesses in public sector demand.”

Commenting on the report, David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “It’s encouraging to see the construction sector show signs of recuperation for the second month running and suggests that the whole UK economic recovery has real substance. Though the industry is moving in the right direction, we mustn't be lulled into complacency as growth is coming from a very low base and operating conditions are still very difficult.

“While purchasing managers noted a growing appetite for new contracts – especially in the housing and commercial sub-sectors, civil engineering is still a sore spot with little activity. Looking forward during election week, it’s a worry considering what impact post-election spending cuts and rising input-price inflation might have on the sustainability of the sector’s recovery.

“More worrying still – we are yet to turn the corner and see an end to the 23 months of relentless job cuts.”

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