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Struggling construction sector sees accelerated rate of decline in activity

CONSTRUCTION activity in the UK fell at an accelerated rate in October for the first time in five months, according to the leading CIPS/Markit construction purchasing managers&rsquo; index yesterday.<br /><br />The headline index showed a fall to 46.2 from 46.7 in September, well below the 50 mark that separates expansion from contraction. Activity by construction firms has now been contracting for 20 months.<br /><br />Jobs were lost at a faster rate in October and business expectations relapsed to a six-month low in October, although sentiment was still firmer than earlier in the year. <br /><br />But the marginal expansion for a second successive month in October in the house-building sub-index, indicating that recent housing market activity and firmer prices has led to house building activity essentially stabilising.<br /><br />Although the construction sector only accounts for approximately six per cent of UK output, it seems that the best that can be hoped for is that the construction sector will only be a modest drag on overall economic activity in the fourth quarter, says Howard Archer at IHS Global Insight. <br /><br />He added: &ldquo;Over the long term, the construction sector will be hit by the government&rsquo;s need to significantly cut back public expenditure for an extended period. This is bound to hit expenditure on infrastructure and public buildings.&rdquo;