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UK construction industry grows for the first time in 25 months

The UK’s construction industry grew for the first time in 25 months according to the latest construction purchasing managers’ index from the Chartered Institute of Purchasing and Supply.

The CIPS survey for March posted an activity reading of 53.1, up from February’s reading of 48.5 led by a rise in commercial activity. It is the first time since February 2008 that the sector has seen a score above the 50 point mark which indicates growth.

CIPS said the growth of the sector was principally reflected by a rise in new orders. House building showed the strongest rise in activity, which was the seventh in successive months.

But crucially, commercial-based activity also increased during March, with growth reported for the first time since February 2008. The civil engineering sub sector, where activity is typically driven by public spending, remained in decline during March.

Incoming new orders increased during March for the first time in four months, and only the second time since February 2008.

However, there were reports that opportunities to tender remained low when compared to pre-recession levels.

But a further sharp decline in employment within the UK construction sector during March highlighted the fragility in the current upturn.

Job cuts were largely attributed to redundancy programmes, with staffing levels showing no signs of stabilisation despite the rises in activity and new orders.

CIPS chief executive David Noble said: “Though it’s great to see the UK construction sector turn the corner after two years of relentless contraction, it’s still very early days. The recession hit construction the hardest and because the industry is operating from such a low base, this upturn may be short-lived.

“Purchasing managers noted an emerging public/private sector divide as the General Election looms closer. While overall industry improvement was bolstered by private sector expenditure - especially in the housing and commercial sectors - it’s worrying to see civil engineering contracting, given that mooted public sector spending cuts are yet to kick in.

“Dwindling head counts, as firms laid off staff at a quicker pace, coupled with weakened confidence about future business performance, suggests that the construction industry still has some concerns over the stability of the recovery.”