Construction index rises at last

The severity of the recession in the UK construction economy moderated noticeably during April. The easing was predominantly centred on the civil engineering industry, although housing and commercial subsectors also experienced weaker falls in output.

Even so, overall activity continued to contract rapidly as global financial and economic difficulties created uncertainty throughout the supply chain and affected demand.

The CIPS/Markit UK Construction Purchasing Managers’ Index rose sharply from 30.9 in March to 38.1 in April, pointing to a far weaker retrenchment of total industry activity. Indices tracking trends in housing, commercial and civil engineering output all rose from the previous month, markedly in the latter two cases.

Still, all remained way below the neutral mark of 50.0, signalling rapid contractions in building activity. Housing was again the worst-performing area of UK construction.

The level of new orders received by UK construction firms continued to fall steeply in April. Respondents predominantly blamed unfavourable market conditions, lacklustre demand and intense competition for the latest drop in new orders. Some firms also noted that customers had cut their budgets.

That said, the rate of contraction lessened considerably from March. The April rate was the slowest for eight months.

Roy Ayliffe, director at the Chartered Institute of Purchasing & Supply (CIPS), said: “The darkness gathering over the UK construction economy during the past 13 months lifted slightly in April but, against a backdrop of ongoing market uncertainty, fewer new orders and fierce competition, blue skies are still a fair way off.

“Nonetheless, confidence in future sector performance improved. A number of purchasing managers also noted that previously postponed contracts were expected to recommence.”