Construction flat-lines on stagnant housing market

FLAT activity in the construction sector in September was revealed yesterday by Markit’s purchasing managers’ index (PMI).

A sharp fall from 52.6 in August to 50.1 in September was recorded, bringing the sector closer to the 50 threshold that separates growth from contraction.

“UK construction companies continued to struggle in the face of growing concerns about the wider economy, with weaker client confidence leading to a reduction in new business received during September,” said Markit economist Sarah Bingham.

“Businesses are relying on existing contracts to support output, which bodes ill for growth in coming months.”

Analysts are also blaming cuts in government spending for the sector’s poor performance.

“The latest deterioration in the construction PMI was mainly a result of falls in housing and civil engineering activity”, said Barclays Capital’s Blerina Uruci.

“Both sectors had been expected to perform poorly this year as a result of the continued weakness in the housing market and the government cuts in infrastructure spending.”