Survey shows UK construction still in the vice

Ben Southwood
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UK CONSTRUCTION firms continued to feel the pain in January, according to data out yesterday.

The Markit construction purchasing managers’ index (PMI), released yesterday, was stuck at its six-month low of 48.7 in the first month of the year, signalling another month of moderate contraction in the sector.

This pulls it down from the already low base it has reached – and failed to convincingly recover from – during the credit crunch and continued recession.

“January’s survey results are yet another indicator of the severe underlying fragility across the UK construction sector, with output failing to rise in any of the three sub-sectors for the first time since last summer,” said Tim Moore at Markit.

“Snowfall at the start of the year may have disrupted output to some degree, but unfavourable weather outside is clearly far down the long list of difficulties afflicting construction companies at present.”

Another terrible performance in the construction sector could hamper the overall economy, despite the fact it only makes up about seven per cent of GDP. The industry was the major drag on economic growth for the first three quarters of 2012, pulling some half a percentage point from growth in the first three months of the year.

And David Noble, chief executive of the Chartered Institute of Purchasing & Supply, who prepared the data in tandem with Markit, warned that if the government fails to make good on its promises of infrastructure spending, worse news could be to come.

“Against expectations, businesses have a spring in their step looking ahead to the rest of 2013,” Noble said. “This new-found confidence has been buoyed by news of public investment, but it could be found wanting, if the government’s recent rhetoric on major infrastructure projects fails to bear fruit.”