UK construction output contracts sharply

UK CONSTRUCTION output fell last month at the fastest pace in more than three years, an official survey showed this morning.

The Markit/CIPS Construction Purchasing Managers' Index (PMI) dropped to 46.8 – the lowest since October 2009 – sinking further below the 50 level that separates growth from contraction.

It compares with January’s figure of 48.7.

The sharp fall reflected declining levels of commercial building work, and a decrease in civil engineering activity.

This offset an increase in housing activity over the month – possibly boosted by the central bank’s Funding for Lending Scheme – with the expansion the first improvement since last May.

Construction output, which makes up less than seven per cent of the UK economy, was the main drag on growth last year.

"With total output falling at the steepest pace for over three years, the latest PMI survey is confirmation that January’s construction decline was not entirely snow-related," said Tim Moore, senior economist at Markit said yesterday.

"Downward pressure on client budgets, alongside subdued public sector spending, again led to lower output levels and reduced new order inflows."