Construction activity levels improve says CIPS

The UK construction industry is improving activity levels at a solid pace according to the latest Markit CIPS UK Construction purchasing managers index survey.

The survey found growth of both new orders and output was broadly consistent with rates seen in June, while for the second successive month there was a fall in the number of jobs lost.

There was also evidence of confidence regarding future business prospects improving slightly.

Sarah Bingham, Markist economist and author of the report said:”July PMI data signalled that the UK construction sector entered the second half of the year in much the same way as the first half was concluded. Rates of growth for both new orders and activity were solid, but remained below long-run trends. Furthermore, employment fell for a second month running.

“Moreover, the subdued level of confidence regarding future business expectations reflects the challenging outlook for the UK economy, and therefore the construction sector. Subsequently, concerns over the stability of growth going forward, for private as well as public sector firms, are likely to hinder spending on construction projects and, ultimately, the expansion of the sector.”

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “It’s a case of ‘as you were’ for the UK construction sector this month with little change in the rate of activity growth since June. Whilst the sector is battling against poor economic sentiment, high inflation and continued worries in the Eurozone, the sustained growth, albeit at a historically mild pace, has to be seen as a positive, especially compared to the fallback in the manufacturing sector.

“A continued rise in new orders suggests that activity should be supported in the near-term, but confidence regarding potential activity growth for the next year remains relatively subdued. Subsequently, firms are purchasing only to meet current requirements and remain cautious about replacing leaving staff, as the general mood remains uncertain.”