British building industry could turn the corner

 
Julian Harris
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THE UK’S struggling construction industry showed signs of getting back on its feet last month, according to a closely-watched business survey released yesterday.

The sector remains in contraction but appears to be bottoming out – an outcome that would boost Britain’s second quarter GDP result and bode well for the recovery.

Markit’s purchasing managers’ index (PMI) rose to 49.4 for constructors, its highest score for six months.

As the 50 level indicates economic flatlining, April’s PMI score shows that the industry’s recent decline is edging towards an end.

Today Markit releases its latest PMI for the all-important services industry, the UK’s largest sector. On Wednesday it released a surprisingly positive score of 49.8 for the factory sector, which is also showing signs of reversing its decline.

“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,” said Markit economist Tim Moore.

While sentiment is cautiously picking up in the industry, Moore warned that total new work dropped for the 11th straight month, suggesting that a turnaround will not be easy.

“Total construction output was mainly supported by higher levels of residential building activity in April,” he also revealed, saying that new housebuilding schemes had helped.

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

Analysts also believe that weather could be having some effect on the industry.

“Site time was severely limited during February and March due to the horrendous conditions and we would hope that the summer sees a glut of catch-up works to bolster the industry,” commented Jeremy Cook of foreign exchange firm World First.