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Activity lowest for nearly a decade

Activity in the UK's construction industry sank to its lowest level for nearly a decade last month, a report said today.

The Chartered Institute of Purchasing and Supply said its Construction Purchasing Managers' Index - which measures overall industry performance - registered 46.1 in April, the weakest reading since December 1998. A figure of 50 represents growth.

Last month's measure was down from March's figure of 47.2, which signalled the first contraction for the industry in more than six years.

The further deterioration came as optimism in sector growth over the coming year eased to its lowest level since October 1998, dropping to 60.1.

Weak economic conditions in the UK, especially in the slowing housing market, and reduced tendering opportunities have been blamed for the drop.

All three sectors of the industry - housing, commercial construction and civil engineering - reported falling activity last month, according to the CIPS survey.

April saw volumes of incoming new work drop for only the third time in the survey history, according to CIPS. But the new orders index edged up from March's record low of 48.9 to come in at 49.1, pointing to only a weak contraction in orders received.

Soaring prices for metals and oil, which scaled new heights this week close to 120 dollars a barrel, have also piled inflationary pressures onto the construction sector.

That left the CIPS' input prices index, which measures how the cost of raw and production materials used by construction firms change, at 74.3 last month, little changed from March's 74.4 which was the highest reading since November 2004.

Although firms recruited additional staff for the twenty-second consecutive month, employment growth eased to the weakest pace recorded during this period.

CIPS director of professional practice Roy Ayliffe said: "Worryingly, growth in the UK construction sector has fallen at the sharpest rate in almost nine-and-a-half years as purchasing managers reported significantly lower levels of output and new orders.

"In particular, the housing and commercial sub-sectors have suffered the worst from these challenging economic times."

He added: "Input price inflation is continuing to put additional pressure on firms and has rebounded only a little from March's forty month high.

"All in all, it is hardly surprising then that confidence in the future performance of the sector has fallen to its lowest level since October 1998."