05 July 2006 | Rebecca Ellinor

The pace of activity in the UK construction sector last month dropped to its lowest level since January.

The overall CIPS Purchasing Managers' Index (PMI), in which an index above 50 indicates growth, recorded a reading of 50.8, weaker than May's figure of 52.7. So while activity overall grew, it was at its weakest rate for six months.

The overall PMI was hit hardest by a steep fall in activity on housing projects, which was the lowest it has been since the survey began nine years ago. The housing activity index recorded 44.6.

Building work on civil engineering projects also declined in June, with an index of 49.

Commercial construction was again the only to register growth in the past month, which was attributed to new contracts and work on existing projects. The commercial activity index posted 53.3.

New orders increased last month with almost 30 per cent of firms reporting a rise, although the rate of growth slowed to a modest pace. The new orders index came in at 52.5.

Input prices rose sharply to 74.2, the highest they have registered since January. Steep oil and metal prices are thought to have driven up costs.

Despite the slowing pace of activity in the sector, UK constructors remained optimistic, with the future business activity index reading 70.9.

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

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