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Conditions easing in construction sector

Market conditions appear to be easing for the construction sector, with market contractions slowing according to the latest data.

In its monthly Construction Purchasing Managers’ Index (PMI), which indicates confidence in the construction sector, rose from 30.9 in March to 38 in April, the slowest level of contraction for eight months..

A PMI of 50 would indicate a neutral outlook, but below 50 still indicates market pessimism.

Director at the Chartered Institute of Purchasing & Supply, Roy Ayliffe, said: “The darkness that has been gathering across the UK construction economy over the past thirteen months lifted slightly in April but, against a backdrop of ongoing market uncertainty, fewer new orders and fierce competition, blue skies are still a fair way off.

“Nonetheless, confidence in future sector performance improved. A number of purchasing managers also noted that previously postponed contracts were expected to recommence,” he said.

Indices tracking trends in housing, commercial and civil engineering output all rose since the previous month, and markedly in the latter two cases.

Economist at Markit Economics Gemma Wallace said: “The recession in the UK construction economy, which had been generally deepening, eased off sharply in April. The headline PMI rose to its highest level for seven months. It was another step in the right direction, but it will take a lot more to restore confidence, and therefore demand, in the sector – let alone to pre-crisis levels.

“The housing industry in particular will find it difficult to recover. On the supply side, constructors are worried about falling house prices, which have largely been driven down by factors restricting demand. Banks have turned more risk-averse, keeping credit availability tight, which has led to falling mortgage approvals. These issues are likely to persist and affect house building activity for some time to come.”

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