Construction activity recovers in December

Construction activity increased in the last month of 2011, despite deepening gloom over prospects for the economy in 2012, according to the latest survey of purchasing managers.

The monthly survey by the Chartered Institute of Purchasing and Supply (CIPS) with Markit, shows the construction purchasing managers index rose from 52.3 to 53.2, where any figure above 50 reflects an increase in activity.

Despite the rise from November, the figure was still below that recorded in October, and well below the long term average for the series.

However, CIPS said December represented the first time for nine months that all of the three main construction sectors - commercial, civil engineering and housing - reported rises. The fastest growth was in civil engineering, however the commercial sector fell to its lowest level of growth for a year.

The survey also recorded a modest rise in construction employment, despite anecdotal reports of lay-offs at a number of major contractors. It also found a rise in purchasing activity in December, but that optimism about growth in 2012 “remained relatively subdued”.

David Noble, chief executive of CIPS, said it was too early to measure the impact of some of the big government spending projects announced in the autumn statement. He said: “Despite the overall growth in construction output and relatively milder weather conditions, December’s PMI painted a mixed picture and therefore offered little to raise the spirits.

“Though there were modest increases in employment, it’s likely that many firms were hiring through necessity rather than optimism about any pick up in business in the next couple of months.”

Andrew Duncan, managing director of property at consultant Turner & Townsend, said: “Against expectations, the construction industry ended 2011 at a sprint rather than a crawl. Such upbeat numbers will provide some solace to a bruised and battered industry, but construction output is notoriously volatile.

“New business orders have now increased for three consecutive months, but the industry’s confidence remains very weak.”