December construction was weakest in six months

UK construction output contracted at the fastest rate in six months in December 2012, mainly due to a steep fall in house building.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) fell to 48.7 last month from 49.3 in November, further below the 50 level that separates growth from contraction. Economists had forecast a reading of 49.5.

The index is now at its lowest since June, when unusually poor weather and extra public holidays dented output.

“December rounded off a miserable year for the UK construction sector,” said Tim Moore, senior economist at Markit and author of the survey.

Residential building shrank at the fastest pace since December 2010 when heavy snow disrupted construction.

“Survey respondents are also relatively subdued about the 2013 outlook amid reports from their clients that budgets will be under even greater pressure over the year ahead,” Moore said.

According to the PMI, British construction output contracted in two of the three final months of 2012, dampening hopes that the sector will boost the economy in the fourth quarter.

Construction accounts for around 7% of Britain’s GDP and weak activity in the sector was the main drag on the economy this year.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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