UK Construction: contraction continues

UK Construction: contraction continues
Published: 05 October 2009

Activity in Britain’s construction sector contracted for the 19th month in a row in September as firms continue to struggle to keep their heads above water, reports the Guardian newspaper.

In its monthly check of the UK’s flagging construction sector, the Chartered Institute of Purchasing & Supply (Cips) found activity had fallen to its lowest level since June, indicating that August’s slight improvement may have been just a blip. Its purchasing managers index fell to 46.7 in September, down from 47.7 in August. A mark below 50 signifies the sector contracted rather than grew.


David Noble, Cips’ chief executive, said: "The UK construction sector continued to be heavily impacted by the recession as it deteriorated at its fastest rate since June.

"Though the industry is not contracting as quickly as it was earlier in the year, firms are struggling to adjust to comparatively low levels of activity, as reflected by employment levels, which took another hefty hit and have dropped consecutively for 16 months."

The rate of decline in staffing numbers increased since August to the steepest in three months. Jobs have now been lost in every survey period since June 2008. More firms also stopped using subcontractors in September, extending the period of sustained decline to 22 months.

Noble said: "One of the few glimmers of hope appeared in the housing sub-sector, which registered a marginal rise in activity for the first time in 22 months. Moreover, as commercial and civil engineering showed further signs of decline, this collectively highlights the volatility of the UK construction industry."

Sarah Ledger, an economist at Markit, said: "Encouragingly, the residential construction sector recorded growth in activity and overall incoming new contracts received by the UK construction sector fell only fractionally. Therefore, while a positive contribution to GDP would seem unlikely for Q3, an improvement may be seen after this."