Civils and office building workloads fall sharply

Aaron Morby 11 years ago
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Construction buyers have reported a sharp fall in office building and civil engineering workloads.

February workload returns for the Markit/CIPS UK Construction Purchasing Managers’ Index recorded the fourth monthly drop in a row.

The index, which measures overall output in the sector, fell from 48.7 in January to 46.8 last month, the fastest pace of contraction since October 2009

Some of the sharp falls were offset by an increase in housing activity in February, with the marginal expansion in residential building the first improvement since May last year.

Construction firms also highlighted an ongoing deterioration in their new order inflows during the latest survey period.

Lower levels of new work have been recorded in each month since last June, reflecting cuts to client budgets and intense
competition for new work.

Nonetheless, employment numbers rose fractionally in February, contrasting with the downward trend seen during
the final three months of 2012.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “This is undoubtedly a dismal set of data for UK construction, especially the sharp falls in commercial building work and civil engineering activity.

“With total output falling at the steepest pace for over three years, the latest PMI survey is confirmation that January’s construction decline was not entirely snow-related. Downward pressure on client budgets, alongside subdued public sector
spending, again led to lower output levels and reduced new order inflows.

He added: “The only exception to the overall output trend was a stabilisation in residential construction, with eight months of sustained decline ending in February.

“Moreover, construction companies cited new house building projects as an area having some potential to boost UK construction output over the next 12 months.”

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “There is barely a crumb of comfort in this month’s figures for the construction industry to ease the continued decline in performance.

“The dramatic fall in civil engineering activity is particularly worrying, having been the one bright spot in the second half of 2012.

“Whilst the housing sector has registered mild growth for the first time in nine months, it remains weak compared with its long run average. To add insult to injury, commercial activity declined at a worrying pace.

“Overall, these figures are disappointing to say the least and with little in sight to improve the sector’s fortunes, all eyes will be on the Chancellor to do something to prevent further decline in the sector as we approach the Budget later in the month.”

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