UK construction activity stays subdued

November continued to show a slowing up of construction activity according to the latest Markit/CIPS Construction Purchasing Managers’ Index, although it was slightly higher than in October.

The Index for November stood at 51.8, up fractionally from October’s 51.6.

Confidence was stronger than it has been in five months, but still remains historically low and jobs continued to be cut at a marked rate.

Of the three broad UK construction sub-sectors, both commercial and civil engineering reported rises in activity in November.

Commercial based construction signalled the sharpest growth of the two categories, while the expansion in civil engineering output was an improvement on October’s contraction. Constructors reported a third consecutive decline in house building during November, although it was a weaker decrease than in previous months.

New orders received by construction companies increased marginally during November. However, the latest expansion was the slowest in the current nine-month period of growth.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “In the short term, the prospects for the UK Construction sector look gloomy but confidence about possible recovery in the next 12 months has risen. Growth in order books continues to be sluggish as projects are delayed and this is impacting on purchasing activity. Perhaps most concerning is the fall in employment levels reflects job cuts rather than a freeze on new hires.

“The house-building sector in particular continues to suffer as a weaker housing market makes builders nervous about committing to large new building projects and competition is rife. Purchasing managers say that growth in the current month was reliant on the commercial and civil engineering – yet uncertainty remains about the impact of public sector spending cuts.

“We are likely to see construction improve only when the economy as a whole strengthens. Until then, the sector will remain stuck in a rut.”