Construction growth slows despite housing boost

Published:  06 December, 2011

LONDON: Britain's construction sector suffered a relapse during November, according to new data released on Friday.

Data compiled by Markit and the Chartered Institute of Purchasing and Supply showed that the construction sector continued to grow during November – in contrast to other parts of the economy – but at a slower pace. The Markit/Cips PMI index stood at 52.3 during November – a value above 50 indicates growth – down from 53.9 in October, a reading that had surprised economists for its strength.

Despite the slowdown in the rate of growth, there was a small increase in activity in the residential construction market, which will be seen as good news, given the headwinds that have buffeted house builders over the past six months.

David Noble, the chief executive of Cips, said construction companies faced a number of difficult challenges. "Raw materials, energy and fuel prices continue to hinder the sector.”

But the prospects for a recovery in construction output weakened with new orders figures from the Office of National Statics for the third quarter showing a fall of more than 5% compared with the same quarter last year.

New orders in the first nine months of 2011 are 14% lower than in the same period last year.

Michael Ankers, chief executive of the Construction Products Association Chief Executive, said: “Although new orders have improved since the previous quarter, this is still the lowest figure for Q3 since 1980.”

“This week’s Autumn Statement brought the prospect of increased investment in infrastructure but the government’s figures show that this will not have any significant impact until 2013 at the earliest. As a result, and in the light of today’s new orders figures, the industry needs to brace itself for an even sharper fall in output in 2012 than that already anticipated.”

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