Construction output falls for first time in 9 months

Published:  06 January, 2011

LONDON: Building activity contracted in December bringing to an end nine months of growth in the industry according to the latest data in the Markit/CIPS Construction Purchasing Managers' Index released yesterday.

The index posted 49.1 – falling from November's 51.8. On the index, a level above 50.0 indicates industry expansion, below indicates contraction.

The fall is blamed on poor weather conditions as new order growth accelerated slightly. But employment fell sharply, and confidence regarding future business prospects remained relatively weak.

Only commercial construction activity expanded last month, but the rate of growth was the slowest in almost a year. House building saw its sharpest contraction since April 2009 and civil engineering activity also declined.

Sarah Ledger, economist at Markit and the report's author said growth has been subdued largely due to contractions in residential construction.

David Noble, chief executive, Chartered Institute of Purchasing and Supply, said: "The overall picture for 2011 is also likely to stay subdued."

"A major worry is the situation in the housing market, which suffered its steepest decline in activity for 20 months. Proposed measures to further tighten regulations on mortgage lending may only serve to intensify this worry into a longer, more protracted year of concern," he said.

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