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CIPS: Construction declines at slowest rate since April 2008

UK construction activity is falling at its slowest rate for 17 months according to the latest purchasing managers index from the Chartered Institute of Purchasing and Supply.

While CIP’S index for August still recorded a contraction of the industry with a reading of 47.7, it is the slowest level of decline since April 2008.

The figure is up on the reading of 47 for July – but any reading below 50 indicates a decline in construction activity.

All of the three sub-sectors continued to report reductions in activity, although the rate of decline was only marginal within the commercial sub-sector and slowed on the previous month’s data.

The housing sub-sector recorded a marked easing in the rate of contraction posted in July.

In contrast, the fall in activity registered in the civil engineering sector worsened during the month.

Employment levels contracted sharply in August as constructors continued to adjust capacity to accommodate reduced business.

Despite the maintained fall in current activity levels, UK construction companies indicated sustained optimism over future business activity.

The degree of confidence was again high, reflective of forecasts for business expansion and gains in new orders.

CIPS chief executive David Noble said: “Though August saw a reduction in the rate of deterioration in the construction sector, it is still the sick man of the UK economy.

“Far from seeing signs of a return to growth, the sector remains stuck in an unprecedented eighteen month period of contraction.  

“Perhaps most concerning was further news of job cuts as companies tried to manage reduced levels of business.”