Decline in construction activity slows

Purchasing activity in the construction industry fell at its slowest rate for over a year last month, but builders continued to shed jobs, according to the latest data from the Chartered Institute of Purchasing and Supply (CIPS).

The CIPS purchasing managers index recorded a figure of 47 in July, up from 45.9 in June, and a low of 27.75 in the depths of the recession in February. Any figure below 50 represents a decline in activity, meaning July still saw lower levels of purchasing than June but that the rate of decline is easing.

The figure puts construction again behind the manufacturing sector, which recorded a small rise in activity last month, the first for 15 months, with a figure of 50.8.

July's index was the highest since March 2008, when a figure of 47.19 was recorded, and represents the 17th straight month of decline

The CIPS index, produced for the body by research company Markit, showed that each of the three construction sectors – housing, commercial, and civil engineering – also declined in activity. The situation was worst in the housing sector, which recorded a figure of 44.17.

The survey found construction companies in the UK cut their workforces for the 14th month running. While the rate at which jobs were shed eased since June, a large number of losses were still reported.

The number of offers to tender rose, but continued caution meant builders failed to revive purchasing activity, despite a near-stabilisation of new orders. The survey also found that builders were able to negotiate tougher deals with their suppliers, given increased competition for business.

However, optimism about future activity levels in 12 months' time continued to increase in July, reaching its highest level for over two years, according to the survey.