Growth drops in building sector

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) fell to 54.4 from 55.8 in April, staying above the 50 level which separates growth from contraction and beating forecasts for a fall to 54.2.

However, the reading was the lowest in three months.

Coming soon after news that the manufacturing sector shrank at its fastest pace in three years in May, the construction release further dents hopes of an early end to recession and raises the chances of more stimulus from the Bank of England.

New business growth in construction eased markedly to its weakest in four months, with some firms noting that lower confidence in the economic outlook had depressed demand for new projects in May.

Around a third of respondents thought their output would increase in the next 12 months, while almost a fifth expected a reduction.

The resulting balance signalled that the degree of positive sentiment about future business fell to its weakest since October 2011.

“While still in positive territory, the month-on-month fall in business confidence was the greatest since June 2010,” said Tim Moore, senior economist at Markit, which compiles the survey.