Construction bounces-back to growth in January

Grant Prior 13 years ago
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Construction returned to growth in January following disastrous figures for December which raised the fears of a double-dip recession in the industry.

Latest figures from purchasing professionals in the Markit/CIPS UK Construction PMI index show a figure for last month of 53.7 where anything above 50 represents growth.

The numbers are a marked improvement on December which saw the index slump to 49.1 as the industry contracted.

Chris Williamson, Chief Economist at Markit said: “The UK construction sector showed a welcome bounce-back from the snow-related drop in activity late last year.

“However, after estimating for the boost to activity in January resulting from the disruption to workflows in December, the underlying growth trend remains only very modest and well below the surging pace seen in the second quarter of last year.

“Looking at the trend in recent months, the housing market seems to be a particular area of weakness, with house building stagnating at best.

“Civil engineering has seen only very modest growth, leaving commercial activity as the only sector recording any noteworthy expansion, albeit well below that seen last spring.

“The outlook appears to be one of nervous optimism. Confidence over future business prospects was at its strongest in eight months, but this still remained relatively subdued compared to the long-run average.

“This nervousness about future prospects was highlighted by a disappointing further reduction in employment.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “This is good news for the Government as the construction sector seems to have bounced back, suggesting it was the widespread chaos caused by the snow, that had such an impact and hampered growth in December.

“Despite the growth of activity, an air of caution persists amongst construction companies as employment levels continue to fall.

“Some companies that are doing well are hiring but many more companies are continuing to adjust to lower workloads and deferral of projects. Until growth becomes sustained it is unlikely we will see employment levels rise substantially and consistently.

“At the moment it is hard to tell what 2011 holds for the sector, even though confidence about future activity has risen, it is still weak and many are pinning their hopes on general economic improvements to make that confidence a reality.

“Furthermore, the rise in raw material prices as well as the latest VAT hike will add to the worries for the sector. Bearing this in mind we may be looking at another disappointing year with continued uncertainty where hopes are dashed.”

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