Construction sector confidence slips

Published:  07 June, 2012

LONDON: Confidence in the construction sector suffered its biggest fall for nearly two years last month, fuelling fears about the strength of the economy. The Markit/CIPS survey, where a reading above 50 represents growth, showed overall activity in the sector fell to 54.4 in May, from 55.8 in the previous month and further down from March's 21-month high.

But confidence was hit by its biggest monthly drop since June 2010 amid a slowdown in new business growth and opportunities to bid for new work; however, it did remain in positive territory.

Output in the sector was at its weakest for three months, with housebuilders only showing marginal growth, civil engineering projects seeing much slower expansion compared with the previous month, while commercial projects were most resilient. Activity in the sector still showed "solid growth", which will help ease some of the nerves following last week's contraction in the manufacturing sector, which saw the second steepest fall in the 20-year history of the Markit survey.

CIPS chief executive David Noble said: "Reports of the UK's return to recession appear to have delivered a blow to general confidence in construction, with this month's PMI posing some big questions for the sector in the coming months." While the sector continued to take on more staff for the third month in a row, he added that the weakening in new orders to a four-month low meant this trend may not be sustainable.

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