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Construction new orders fall at sharpest rate in three years

Construction new orders fell at the sharpest pace in three years last month, while output hit a six-month low.

Housing activity also dropped at the fastest rate for two years, according to the Markit/CIPS UK Construction Purchasing Managers’ Index (PMI).

The index, where 50 is the neutral benchmark, fell from 49.3 in November to 48.7 during December.

It says UK construction companies indicated a drop in their volumes of incoming new work for the seventh consecutive month in December.

Firms said pressure came from strong competition for a shrinking pool of new invitations to tender amid a background of subdued business and consumer confidence.

A lack of new work to replace completed projects in turn contributed to a drop in construction employment levels for the third month running in December.

Chartered Institute of Purchasing & Supply chief executive officer David Noble said confidence in the construction sector is now lower than the four year post-recession average, reflecting the poor performance of the sector in the final month of 2012.

“Construction in housing is particularly desperate having experienced the fastest decline in two years, with the current period of contraction now lasting seven months in a row.

“Commercial housing activity has also continued to fall, albeit at a slower rate, leaving civil engineering as the only sector recording growth in the industry.

“Continued increases in business costs, alongside low stocks at suppliers and longer delivery times complete a depressing picture for the construction sector going into 2013, making it hard to see where a change in fortunes might come from.”

The report said ouput in June 2012 was constrained by unusually bad weather and an extra bank holiday.

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