02 June 2006 | Rebecca Ellinor

Activity in the UK construction sector continued to rise in May, marking four and a half years of growth.

However, the rate of activity growth eased to its slowest since February.

The overall CIPS Purchasing Managers' Index (PMI), in which an index above 50 indicates growth, recorded a reading of 52.7 for May - a slight drop on April's 53.7 posting.

The seasonally adjusted index showed commercial construction activity fell from 55.5 in April to 55.4, civil engineering dropped from 49.4 to 44.8, and housing activity fell from 51.5 to 49.8.

New orders continued to come in with the index posting a reading of 54.7, higher than April's figure of 53.6. Purchasing managers reported greater opportunities to tender, leading to increased acquisitions of new contracts.

Gains in new orders and expectations of future contract wins kept confidence high - although the overall degree of optimism was its weakest for nine months.

Expansion of the UK construction workforce was maintained but the rate of job creation was its lowest since August 2002, with the employment index posting a reading of 51.5.

Purchasing managers reported that shortages of raw materials combined with insufficient staffing levels at suppliers resulted in slower deliveries of purchased items. The suppliers' delivery times index was down to 46.2. High oil and metal prices also continued to hit costs.

Roy Ayliffe, director of professional practice at CIPS, said: "May's sustained growth in UK construction activity fuelled an increase in confidence among purchasing managers, who see the latest increase in new orders and expected contract wins as positive signs for the future. Despite this, the rate of job creation fell to its lowest in almost four years, as companies took a more cautious approach to hiring."

Coverage of previous PMI reports is available at www.supplymanagement.com/pmi

SMjun2006