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Construction sector continues to contract

The construction sector continued to contract in November, with construction and civil engineering falling at record rates, according to new research from the Chartered Institute of Purchasing and Supply (CIPS).

The seasonally adjusted Purchasing Managers' Index (PMI) which gives a single figure to measure industry performance posted a new survey low of 31.8 in November. 50 would indicate no change.

Housing remained the worst-hit sector, where building work contracted severely. The other two categories - commercial and civil engineering - also fared badly during the latest survey period, posting series-record declines in activity.

The seasonally adjusted New Orders Index posted 34.9 in November, reflecting a steep fall in incoming new business to the UK construction industry.

Director of Professional Practice at the Chartered Institute of Purchasing and Supply, Roy Ayliffe, said: "The unyielding global economic challenges continued to depress the UK construction sector in November, reflected by the PMI falling to its lowest-ever reading.

"Purchasing managers reported significant falls in new orders, industry output and employment, providing yet further evidence of the deterioration in the sector.

"There was, however, some relief for builders as input prices fell for the first time in nearly a decade. Coupled with this, the Bank of England's interest rate cut provided a glimmer of hope and helped bolster sector confidence."

Consequently, in spite of the dismal market conditions, firms were slightly optimistic about future activity. The Future Business Activity Index reading of 51.0. Reports indicated that the Bank of England’s interest rate cut was the main source of the improvement in confidence.

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