Survey reveals building slowdown
Published:  07 September, 2010

LONDON: The Purchasing Managers' Index reveals a marked fall in optimism after the construction industry's spectacular second quarter growth.

Official data last month showed British construction output had jumped 8.5% between April and June, its best showing since 1982. But the forward-looking purchasing managers' index suggests this pace will fall back and could slow further.

UK construction grew at its slowest pace for six months in August after a decline in house building, according to the report. Construction sector lost momentum after homebuilders scaled down work and revealed that new orders for the next three months have slumped.

The Markit/Chartered Institute of Purchasing and Supply Construction PMI slipped to 52.1 in August from 54.1 in July. The figure was below the consensus forecast of 53.2 and more than six points below a peak in May. Employment within the UK construction sector decreased for a second consecutive month.

David Noble, chief executive of the Chartered Institute of Purchasing and Supply, warned that signals from the PMI data pointed to a stalled recovery in the construction industry. "The most disturbing thing is the marked slowdown in the residential sector as this is where much of the recent sector growth has come from," he said.

"The slight increase in public-sector activity disguises continuing uncertainty about the scale of spending cuts, which we have yet to experience."

Mr Noble added: "For the more optimistic amongst us, however, it still looks like we are entering a period of low growth rather than another recession but the jury's still out. Although this month's figures are disappointing, we should remember that overall the sector is still growing."

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