Construction sector picks up – but confidence dips

Activity in the construction sector picked-up in September, but firms' confidence about the future fell to an 18-month low on worries about government spending cuts, a survey of purchasing managers showed.

The Markit/Chartered Institute of Purchasing and Supply construction PMI rose to 53.8 in September from 52.1 in August, confounding expectations for an easing to 51.4.

The survey said growth in the industry was led by the commercial sector and civil engineering – which reported its strongest activity since February 2008, while activity in the housebuilding sector fell, ending a 12-month period of growth.

New orders remained in positive territory in September, but the rate of growth eased for a fourth successive month and firms cut jobs.

In addition, worries about the government's spending cuts hurt confidence.

"Whilst the construction sector is still growing, a sharp fall in confidence suggests work in the pipeline may not be so strong," said David Noble, chief executive of the Chartered Institute of Purchasing & Supply.

"Not since the onset of the recession have we seen optimism in such short supply."