Buyers reveal biggest drop in orders for three years

Grant Prior 12 years ago
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Construction buyers reported a renewed downturn in output during August as new orders also fell at their fastest rate for three years.

The latest Markit/CIPS Construction Purchasing Managers’ Index fell to 49 from 50.9 as activity fell in all sectors.

Any figure below 50 on the sentiment survey represents a fall in output.

The survey also recorded the fastest fall in new business volumes since April 2009.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “This is dire news for the construction sector which saw its fastest drop in new orders for over three years.

“Undoubtedly the Government will come under more pressure to help the sector and implement Sir Adrian Montague’s proposals to kick-start house building, when it responds later this year.

“Both the decline in commercial activity and the significant drop in new orders are particularly worrying.

“The commercial sector had previously been propping up the figures and the lack of new contracts suggests things will get worse before they get better.

“Inevitably confidence has also been hit hard, and it has not been recorded as low as it is now, since last October. For good reason too, as it’s clear that tough times still lie ahead.”

Tim Moore, Senior Economist at Markit said: “August data reaffirms that UK construction firms are suffering a prolonged downturn in new work and there is little evidence to suggest an imminent rebound in output levels.

“This has been the pertinent message from the UK Construction PMI surveys throughout the summer, and most worryingly the latest drop in new orders was the fastest since the sector was in full scale retreat in early 2009.

“A construction decline for 2012 overall is statistically baked in the cake.

“To bring output for the year as a whole up to the total level seen in 2011 would require a rather implausible double-digit growth surge in each of the final two quarters.

“Therefore, an important issue is simply whether a floor has yet been established, and the survey evidence at this stage seems to suggest it hasn’t.

“Indeed, output dropped in August at the second-fastest rate since the snow-affected month of February 2010, with commercial activity even joining the housing and civil engineering sectors in contraction for the first time in two-and-a half-years.”

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