Optimism grows in construction

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CONFIDENCE about future opportunities among building firms surged to an eight-month high in January, as construction output continued growing, albeit more modestly.

While momentum slowed in January, the growth in output, combined with surprise expansion among manufacturers, raised hopes Britain will avoid sliding back into recession.

But economists highlighted construction’s expansion was at a fourth-month low, according to the Markit/CIPS purchasing managers’ index (PMI), where a reading above 50 represents growth.

Output in January measured 51.4, down from 53.2 in December, led by a slowdown in new order growth and some companies reporting contracts finishing.

Both the housing and civil engineering industries registered falling output in January, but the sector was buoyed by commercial activity rising for the 23rd consecutive month.

“The purchasing managers’ survey indicates a loss of momentum in the construction sector in January in terms of both output and incoming new orders, highlighting the fact that the sector is currently facing a very challenging environment,” said IHS Global Insight economist Howard Archer.

“At least though, the construction sector expanded in January according to the purchasing managers and coupled with a marked pick-up in the corresponding manufacturing survey, there are hopeful signs that the economy is growing modestly at the start of 2012, better than expected after GDP contracted 0.2 per cent quarter-on-quarter in the fourth quarter of 2011.”

Construction employment was unchanged in January.