July construction growth slowest in four months

July construction growth slowest in four months
Published: 03 August 2010

British construction sector activity slowed markedly in July to a four-month low as firms’ confidence about the outlook deteriorated due to concerns about public spending cuts, a survey of purchasing managers showed on Tuesday.

The Markit/Chartered Institute of Purchasing and Supply construction PMI fell to 54.1 in July from 58.4 in June, suggesting that expansion in the sector may have peaked.

Official data last month showed British construction output jumped 6.6 per cent between April and June, its biggest rise in almost 50 years. But Tuesday’s survey will reinforce concerns this pace of growth will not be repeated.

"The survey points to a marked loss of momentum in construction activity in July," said IHS Global Insight economist Howard Archer.

"This reinforces suspicion that the jump in construction output in the second quarter reported in the preliminary national accounts substantially overstated the true strength of the sector -- even allowing for the fact that there had been some catch-up in activity due to the very bad weather at the start of the year," he added.

Nonetheless, the survey still showed the fifth consecutive reading above the 50-level which separates growth from contraction.

UK construction companies reported a further rise in new business during July -- the fifth increase in as many months. However, with more panellists indicating that new orders had fallen in July compared to in the previous month, the rate of expansion slowed to the weakest since March, the survey said.