New orders rise in November but activity heads on down

Activity in the construction sector continued to fall during November despite a modest rise in new orders, reveals new data released today. The rise in orders, while marginal was the first recorded for 21 months.

The Chartered Institute of Purchasing and Supply (CIPS)/Markit survey posted a reading of 47.0 in November, indicating that the construction sector had contracted for 21 months in a row.

Both the commercial and civil engineering subsectors reported declines in activity during November. However, residential construction expanded for the third consecutive month, the highest rate of “solid” growth in over two years.

The CIPS said that incoming new business received by construction companies in the UK increased marginally during November, the first rise in new orders in 21 months. Companies told the organisation that targeted marketing and the completion of contract negotiations had supported growth.

Meanwhile, employment in the sector fell sharply for the 18th consecutive month. Subcontractor usage also fell, but at a slower rate.

However, respondents to the CIPS survey were bullish in the longer term, saying that they thought an economic upturn would result in improved workloads over the next 12 months.

RICS chief economist Simon Rubinsohn said that both the CIPS/Markit report and the recent RICS report indicate “a greater layer of optimism about the outlook with workloads expected to edge upwards over the next 12 months”.

Nonetheless, he said, the UK construction industry was still “locked in recession”.