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No festive cheer for 'vulnerable' construction sector

The construction sector is expecting a dire winter, posting the 21st consecutive month of decline in November, on top of fresh job cuts, despite small increases in new business volume.

The monthly construction industry figures for November show little movement compared to last month.

The Purchasing Managers Index (PMI), posted by Markit and the Chartered Institute of Purchasing and Supply (CIPS), was 47, indicating another month of contraction, but at a slower rate than in October where the figure was at 46.2.

A PMI of less than 50 indicates contraction, and PMI of more than 50 growth and 50 indicates no change. This is the 21st consecutive month of contraction for the construction sector.

CIPS Chief Executive Officer David Noble said: “There is little festive cheer for the UK construction industry which still remains very vulnerable. Despite a slight boost in volumes of new business, construction firms are still feeling the effects of the worst economic landscape seen in over a decade. 

“Twenty-one months of continued decline has hit the industry incredibly hard - as highlighted by another round of job cuts this month.

“One positive is that the sector is not contracting as sharply as it was this time last year and purchasing managers are remaining upbeat about future business conditions. A broader economic recovery will improve the sector’s outlook. However, it appears we are still some way off from returning to growth let alone reaching the level it was at only two years ago.”

Markit Economist Sarah Ledger, said: “November PMI data signalled the first rise in new business received by UK construction companies since February 2008. However, this did little to boost activity levels in the sector, given the low base from which the new order improvement originated. A further sharp rate of job cuts highlighted the continued difficult business conditions experienced within the construction industry.

“Positive sentiment over future business conditions remained evident in November, with an eventual recovery in the construction sector most likely to emanate from an overall improvement in the UK economy.”

Readers' comments (1)

  • Cheer up everybody! We need another 500,000 engineers! Everything will be fine.

    Merry christmas.

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