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4 October 2011 | Adam
Leach
A reduction in the
rate of new orders in the UK construction sector resulted in the lowest
possible rate of growth for September.
The Markit/CIPS
Construction Purchasing Managers’ Index reported a score of 50.1, fractionally
above the no change threshold of 50. The latest score indicates a significant
contraction in activity over the past month, 2.5 points weaker than the
performance in August.
The report attributed
the drop to a contraction in new orders, with UK construction companies reporting
reductions in new business for the first time since February. Companies cited
fewer opportunities to submit tenders and projects being delayed or cancelled
as reasons behind the drop in business. Despite this, staff levels in the
sector increased, albeit marginally.
CIPS CEO David Noble, said:
“‘Things can only get better’ is the feeling among some UK construction
companies as many pin their hopes on improved market conditions to pull the
sector out of this near standstill. However, delayed and cancelled projects,
more competitive tendering and general uncertainty over economic conditions are
putting a dampener on things, resulting in the first reduction of new orders in
19 months.”
In terms of the
sectors, housing and civil engineering recorded lower output. Of the two, residential
construction performed the weakest. Commercial construction sector activity continued
to grow, but at a slower rate than recent months.
Markit economist Sarah
Bingham, said: “Civil engineering declined during September, reflective of cuts
in public spending. Meanwhile, house building activity decreased at the fastest
rate in nine months. However, recent announcements by the government may
provide a reprieve in the coming months, as plans are made for land to be
released for development, with construction companies not paying until the
resulting properties are sold.”
