Construction buyers see October activity bounce

Aaron Morby 12 years ago
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Industry buyers have reported a bounce back in orders despite a weak outlook for the sector and falling business confidence.

Activity growth picked up to five-month high in October, despite continued weakness in housing, according to the latest Markit/CIPS survey of purchasing managers.

But the uplift did little to boost business confidence was its lowest for nearly three years.
Buyers also reported warning signs of another round of sharp rise in input price inflation again.

The construction purchasing managers’ index rose to 53.9 in October from 50.1 in September, where any figure above 50 represents growth in construction activity.

Sarah Bingham, Economist at Markit and author of the UK Construction PMI said:
“UK construction output improved in October, as new orders recovered from September’s modest decline.

“Commercial-based construction output was the principal driver of overall growth, maintaining the relatively solid trend of recent months. In contrast, civil engineering activity was broadly stagnant, while the housing sector continued to suffer.

But she added: “The outlook for the sector remains uncertain, with October seeing a further weakening in sentiment regarding business expectations; confidence was at its lowest level since December 2008.

“Furthermore, the increase in employment recorded was fractional, despite the rise in new business and activity.

“This suggests that constructors remain tentative about the longevity of the sector’s growth profile.”

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, warned the better than expected figures in October were little to get excited about given the broad trend of stagnation.

“On the plus side, reports of new contract wins from previously quoted projects and some advance orders for 2012 led to the steepest increase in new business since the spring.

But he added: “Across the sector as a whole, confidence about future business activity plunged to its lowest in almost three years, with optimism fading as constructors come to recognise that there are more challenges yet to come.

“The housing sector continued to deteriorate in October with a decline in activity recorded for a fifth successive month.”

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