Buyers see signs of market stabilising

Grant Prior 11 years ago

Construction buyers reported a sixth successive month of falling workloads in April – but the rate of decline is continuing to ease as the market stabilises.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index  for April rose to 49.4 from 47.2 in March.

The latest figure is near the magic 50 mark where any number above 50 represents a rise in the market.

Civil engineering and commercial activity continued to fall with residential construction the only sector busking the trend.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply , said: “The UK’s construction sector showed signs of stabilisation in April, as it recorded its slowest decline in six months.

“This is a reasonable signal that things are a bit better in the industry but that said, construction is still contracting and witnessing marginal declines in new orders.

“Government efforts to boost the economy may be filtering through as housing activity has risen in every month since February, and experienced its strongest performance for a year in April.

“Compared to the end of last year, business confidence is picking up, indicating a robust degree of optimism for the year to come.

“The moderation in cost pressures linked to lower commodity prices is acknowledged to have brought some relief to the industry.

“Recent GDP figures reinforce the view that construction is still a weak spot for the UK economy.

“Commercial and civil engineering activities remained the laggards of the sector in April, burdened by longer supplier lead-times and a workforce down to bare bones, making it hard to see any major shifts in momentum in the near future.”

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “UK construction sector output was closer to stabilisation than at any time since October 2012, according to the latest survey data.

“A slower decrease in output reflected an element of catch-up after some severe weather delays earlier in the year.

“Total construction output was mainly supported by higher levels of residential building activity in April.

“Some firms cited a boost to output volumes from contract wins on new house building schemes.

“Civil engineering remained the weakest construction sub-category, with public sector order inflows scarce outside of big-ticket infrastructure projects.

“The overall survey findings are an early indication that construction will act as less of a drag on UK GDP over the second quarter of 2013.

“April’s data also highlights a cautious degree of positive sentiment about the year-ahead outlook.

“However, total new work dropped for the eleventh month running during April, which further reduces the likelihood of improving in employment patterns across the sector.”

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