Purchasing managers survey points to continued confidence, but construction recovery remains sluggish

Construction output rose in April according to the UK construction Purchasing Managers’ Index published by CIPS and MArkit, albeit at a slower rate than in March.

The index, which has been consistently more positive than official government data in recent months, said the index registered 55.8 in April, down from 56.7 last month, where any score above 50 represents a growth in output.

Last week the Office for National Statistics found that construction output declined by 3% in the first three months of the year.

According to the CIPS survey, all three sectors of the construction economy recorded growth in April.

Significantly, consistent growth in new orders led to the second consecutive month of moderate growth in staffing levels in the industry.

However, job growth remained well below the pre-recession average. Tim Moore, senior economist at Markit said the news represented an “antidote” to last week’s ONS figures. He said: “Improved inflows of new work have also helped raise business expectations in the sector from the three-year low seen last Autumn.

“However, it should be noted that the level of confidence in the construction industry has consistently run well below the average seen in the decade before the financial crisis, suggesting there has been a widespread loss of optimism since the deficit-fighting austerity measures were first announced.

“Cautious job hiring trends continued, with firms generally able to expand their business activity without needing to take on more staff. Companies are looking for a much stronger pipeline of new projects before new employees are taken on in significant numbers.”

Steve McGuckin, managing director of the consultant, Turner & Townsend, said: “While construction’s poor performance in the GDP numbers prompted a rash of finger-pointing from economists, and the charge that the sector will continue to be a drag on the economy, this PMI survey shows it is clearly dusting itself off and preparing to fight back.

“While we are seeing some very encouraging levels of client activity at the front end of the industry - with the occasional contractor even telling us they are too busy to look at a project tender - it will be some time until this translates into boosted output.”

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