Construction buyers see rise in output

Grant Prior 12 years ago
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Construction buyers saw a rebound in output in July as the industry returned to marginal growth after a dire June.

The latest Markit/CIPS Construction Purchasing Managers’ Index was up to 50.9 from 48.2 last time driven by more commercial work.

Any figure above 50 on the sentiment survey represents an increase in output.

But the survey also recorded the second-fastest drop in new work for two-and-a-half years.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “Last month’s construction performance was so bad, that this month there was hope for a positive turnaround.

“There was some progress, with a slight boost in performance, but the external operating environment remains depressed.

“While the modest growth in July has been driven by the commercial sector, housing and civil engineering continue to lag.

“Worryingly, the sharp drop in new business means there is little chance of the sector rebounding quickly. However optimism remains, with increased employment and retention of subcontractors.

“Whilst this is encouraging, the relative stability of construction employment is partly a reflection of just how steep the job cuts were in the lead-up to the double-dip.

“Firms were hoping for a post-Olympics fillip; based on today’s figures, the overall likelihood of that happening has dwindled.”

Tim Moore, Senior Economist at Markit said: “July’s survey offered little sign of an imminent rebound in the UK construction sector, with total activity rising only marginally after well documented temporary factors had weighed on output last month.

“Another drop in new orders, alongside wet weather conditions, meant a soft platform from which construction output could bounce in July.

“The pace of new order decline was one of the fastest seen in the past three years, and consequently there was just a meagre post-Jubilee expansion of activity levels.

“However, the survey shows that some construction firms are expecting, or at least hoping, that the sector will receive a shot in the arm during the next 12 months.

“A slow and gradual recovery remains most firms’ base scenario, with some anticipating a boost from deferred projects going ahead later in the year.

“This in turn pushed business sentiment up from June’s recent low and supported employment trends across the industry in July.”

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