Construction growth slows in June

New orders for construction increased in June but at the slowest rate since January according to the Markit/CIPS Construction Purchasing Managers’ Index®
The survey found that job cuts were at their sharpest in five months and that confidence was at its lowest point so in 2011 thanks t the marked increase in costs.

The index for activity was 53.6, down slightly from 54.0 in May, with a slowdown in new business growth the primary contributor to the lower rise in activity.

Sub-contractor usage declined sharply and, while availability increased only modestly, rates charged by sub-contractors fell for the first time since January.

Sarah Bingham, Economist at Markit said: “June data rounds off a further solid quarter of growth, albeit down on the first quarter. This contrasts with the surprising weakness seen in the official data for the first three months of the year.

“The contraction in residential construction provides further evidence to highlight the weakness of the household sector in recent months, with the sluggish property market linked to high unemployment, job insecurity and worries about the fragile economic recovery in general.

“More optimistically, commercial construction held up well, suggesting that companies continue to invest in new built assets, and civil engineering even showed a nice rebound from a lull seen in May.

“The worry is that the level of business confidence has fallen to a six-month low in the sector, which suggests that companies are expecting growth to weaken over the next twelve months. That is perhaps not altogether surprising given a marked easing in the rate of expansion of new business inflows in June.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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