Minimal growth in construction

The Markit/CIPS Purchasing Managers Index fell to 50.1, from 52.6 in August, a figure that indicates growth in the sector has all but ground to a halt.

Markit said a slowdown in new orders was behind the lower output and added that in some areas projects were also being cancelled or delayed because of weak client confidence.

Both housing and civil engineering output fell in September, according to the survey, though commercial output increased.

Sarah Bingham, an economist at Markit, said companies were relying on work on existing contracts to support output.

The Markit survey mirrors recent official Government figures that showed new orders fell by 16.3 per cent in the second quarter of this year to their lowest level since 1980.

“Activity growth slowed to near-stagnation, with constructors relying on work on existing contracts to support output. This therefore bodes ill for construction activity in the coming months,” said Ms Bingham.

“UK construction companies continued to struggle in the face of growing concerns about the wider economy, with weaker client confidence leading to a reduction in new business received during September,” she added.

Howard Archer, chief UK economist at IHS Global Insight, said September’s performance was the weakest so far this year and adds to overall growth concerns, although construction activity only accounts for 6.3 per cent of GDP.

He said that one ray of hope was the Government initiative to boost housebuilding through a release of state-owned land under a ‘build now, pay later’ scheme, expected to build up to 100,000 new homes.