Construction output jumps as orders rise – but contraction looms in 2012

Tim Wallace
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BUILDING work expanded in December, in contrast to the UK’s weaker manufacturing performance, Markit’s purchasing managers’ index revealed yesterday.

For the first time in nine months output in all three categories in the sector – civil engineering, housing, and commercial – made gains.

The sector as a whole registered a PMI of 53.2 in December, up from 52.3 in November.

Any score above 50 indicates expansion in output.

Manufacturing, however, contracted in December, with a PMI of 49.6.

The survey’s employment index for construction rose from 52.2 to 52.7, with higher new orders and output driving the increase in jobs.

“Public sector work continued despite spending cuts last month, and private housing construction stayed fairly strong, though the outlook is pretty bleak,” said Kelly Forrest, economist at the Construction Products Association, which expects output to decline by five per cent this year and remain flat in 2013.

Furthermore, December’s expansion will not help keep the UK growing. “Even using the widest definitions of construction, the sector only accounts for around 10 per cent of the economy, so modest growth will not have a significant impact on the economy as a whole. However, a five per cent fall this year will knock overall growth,” said Forrest.