UK construction sector rebound slows

Published:  03 December, 2010

LONDON: The UK construction sector continued to grow in November but at a slower rate than earlier in the year, Markit/Chartered Institute of Purchasing and Supply data shows.


The monthly index stood at 51.8 in November, where a reading of 50 marks the boundary between growth and contraction.

The reading was marginally above the eight-month low of 51.6 recorded in October, but also showed that the construction industry is not expanding as quickly as in the summer, when it was a key driver in Britain's recovery from recession.

Sarah Ledger, economist at Markit and author of the figures, said: "While mild growth of the UK construction sector was reported in November, PMI data signalled that operating conditions remained challenging. New contract wins were restricted by lengthy negotiation periods and deferred spending by clients. Furthermore, jobs were cut again, indicating that constructors see little need to maintain current capacity.

"Expectations for business activity over the coming year did rise in the month, although confidence remained below pre-recession levels."

House building activity fell during the month, according to the purchasing managers, but activity in the index's other two sectors - commercial work and civil engineering - was up.

Howard Archer of IHS Global Insight said today's data showed construction would not be the engine of economic growth over the next year: "It is very clear that the economy cannot rely on a major contribution from construction going forward."

Noble Francis, economics director of the Construction Products Association, said: "The signs are that consumer confidence, mortgage availability and worries regarding the planning system, in particular localism, have had an adverse impact upon housing since the summer, which has seen a definite slowdown."

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