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Construction decline to continue after May slump

Construction activity is expected to continue to decline over the next three months albeit it at a slightly weaker pace, according to the latest research from industry economists Experian.

The company’s Construction Industry Focus shows mixed performances across sectors. But after hitting a four-month high in April, overall activity suddenly dropped by four points in May, with orders falling below normal levels.

It marks the seventh month in a row that the index has ended up below the ‘no-change’ base line. More than three fifths of building firms also reported annual material cost inflation of more than 7.6 per cent.

Part of the European Commission’s Business Surveys programme, the Experian monthly tracker surveys 800 selected firms throughout the UK, with analysis broken down by size of firm and region.

Economists come to a forecast by assessing past levels of activity, orders and tender enquiries and converting the information into an index, with a base line of 50 representing no change.

Looking ahead, the report says employment prospects for the construction industry - which have now dropped every month since January 2008 - remained ‘gloomy’. The employment index was at 33, a drop of 3 points on the previous month and the lowest since May 2009.

However, firms are more upbeat about tender prices, while the residential and volatile civil engineering sectors both saw a rise in activity.

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