Construction industry grows but so do costs

Published:  07 April, 2011

UK: Builders are busy but the pipeline of new orders is thin. Meanwhile, materials price rises have hit a 31-month high, according to the latest report from Markit.

Its Purchasing Managers Index shows risings costs driven by fuel and steel prices. Industry activity registered a level of 56.4 for March, well above the expected 54.9. A level above 50 indicates expansion.

However, the survey also suggested that new order growth had slowed.

Sarah Ledger, economist at Markit Economics and the report's author said: "New order growth slowed more notably than that of activity in March, pointing to a slowdown in activity over the coming months, especially if the pattern is sustained."

Anecdotal evidence also suggested industry members remain concerned about the likely impact of government spending cuts on future business.

"Confidence among constructors remained subdued, slipping to a three-month low, with many companies still wary about the possible impacts from public spending cuts." Despite this, the employment in the cyclical industry appears to have bottomed out.

The survey found the rate of reduction of staffing levels had fallen to its slowest rate since job cuts in the sector began nine months ago.

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