Construction output suffered bigger drop

Construction output fell in February at the fastest pace in more than three years despite a rare pick-up in housebuilding, a survey showed.
By The Newsroom
Published 5th Mar 2013, 08:37 BST

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. The deterioration since January, when the index came in at 48.7, compares with analysts’ forecasts for an improvement to 49.

Despite comprising less than seven per cent of the UK economy, weak construction was the main drag on growth last year, pushing it back into recess- ion.

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“Downward pressure on client budgets, alongside subdued public sector spending, again led to lower output levels and reduced new order inflows,” said Tim Moore, senior economist at survey compiler Markit.

Civil engineering activity fell sharply and commercial work suffered a renewed decline.

However, residential building expanded for the first time since May.

On balance, firms expected a rise in overall construction output over the next 12 months, citing new housebuilding projects as a potential driver of growth, with the degree of optimism the highest since April.

Partly reflecting those hopes, the number of people in construction work rose fractionally in February, after declining during the final three months of 2012.