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CIPS: New orders growth slows for third month

Construction new orders in the construction sector continued to grow in August, yet the rate of growth slowed for the third month in succession, according to the CIPS/Markit Construction PMI report.

While the rate of expansion in construction new orders has slowed, it is still growing. The index is measured on the basis that a reading of over 50 indicates expansion, while a reading under 50 indicates contraction.

The figure registered for August was 52.1, a reduction from the 54.1 reported in July.

A further increase in new work intakes supported the latest rise in activity, according to the survey, however, growth in both new orders and output has failed to boost employment.

Employment within the UK construction sub-sector decreased during August for a second successive month, while the use of sub-contractors also reduced.

Some panelists reported that redundancy programmes are still ongoing.

There was more positive sentiment concerning future business expectations during August, regaining some momentum lost in July.

Concerns over public spending cuts remained but constructoin firms were confident that improvements in overall economic conditions would help to boost new work intakes.

Economist at Markit and author of the UK Construction PMI report, Sarah Ledger said: “PMI data indicated that the UK construction sector continued to expand in August. However, overall activity growth lost further momentum, with the headline index over six points lower than May’s recent high, led by a marked slowdown in residential construction growth.

“Although higher than in July, the degree of positive sentiment amongst UK constructors remained subdued in the context of historical data, as concerns over public sector spending cuts persisted. As a result, staff numbers fell for the second successive month, with companies displaying caution with regard to hiring.”