UK construction drops for a fifth straight month

Julian Harris
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THE UK’S struggling construction sector shrank for the fifth straight month in March, according to a business survey released yesterday.

Yet expectations in the sector improved while the fall in new orders slowed, suggesting that there may be light at the end of the tunnel.

Markit’s latest purchasing managers’ index (PMI) for constructors came in at 47.2 last month – up from 46.8 in February, but still below the 50 mark that indicates no change.

Eight of the last 10 months have seen activity of the construction industry decline, the data says.

Business expectations have shot up this year, however, with the survey’s sub-index jumping from 56.1 at the end of 2012 to 64.3 last month.

“The construction sector seems to have a spring in its step as confidence hit its highest level in a year despite the challenging state of the weather, performance and output in March,” commented David Noble, of the Chartered Institute of Purchasing & Supply (CIPS), which helps compile the data.

Activity in the housing sector has grown, with its survey score edging up to 50.8 in March from 50.4 in February. Yet commercial construction activity (at 46.2) and civil engineering (at 42) remain in decline.

“While the government’s focus on housing appears to have had a positive effect as it out performed other sectors, civil engineering is a different story; here the lack of public spending has resulted in the fastest rate of contraction since October 2009,” Noble added.

Despite some signs of progress to come, the data nonetheless supports fears that the UK economy has sunk back into contraction.

On Tuesday figures from Markit showed that the manufacturing industry suffered a second consecutive month of decline in March, with the factory sector down across the first quarter of 2013 as a whole.

Markit’s PMI for the service sector is published today.

City Views | Are you more optimistic about the economy than three months ago?


I think the economy has improved. Osborne has a tough job, with a lot of pressure on him, but these things take time. There was steady growth last year, and people are still buying luxury travel.


I doubt that the economy has seen improvement at all. I think everything that is going on in Cyprus is going to inevitably have an impact on the UK economy. It’s going to dominate.


Overall, I think George Osborne is doing well. However, he could better facilitate the growth our economy needs by issuing bonds to fund more infrastructure development – especially outside London.

These views are those of the individuals above and not necessarily those of their company