Construction activity continues to decline in the UK, but at the slowest rate in 16 months according to the CIPS/Markit report out today
Commercial and civil engineering posted slower rates of decline during July. Housing construction performance continued to lag behind the other sub-sectors and, furthermore, registered an accelerated rate of contraction in the month.
The length and depth of the economic downturn continued to be felt strongly in employment levels. Construction companies in the UK cut their workforces for the fourteenth month running. While the rate at which jobs were shed eased since June, a heavy pace of losses was still indicated.
Reduced buying activity alongside spare capacity at suppliers meant that input prices continued to fall in June. UK constructors noted that they were able to better negotiate with their suppliers given increased competition for business.
Sub-contractor usage fell during the month, and at a slightly faster rate than in June. Availability of sub-contractors improved again, while their charges continued to fall at a marked pace.
Optimism about future activity levels in twelve months’ time continued to increase in July, reaching its highest level since April 2007. Many construction companies in the UK believe that economic conditions will improve and lead to higher sales.
“Optimism is returning to the UK construction sector on the back of a perceived improvement in economic conditions,” said Chartered Institute of Purchasing & Supply chief executive officer David Noble.
“Whilst the current situation still looks very bleak, an upturn looks much closer than it did just a few months ago. However, times are still tough as steep competition and difficult market conditions pushed the sector into its seventeenth month of retrenchment. What’s more, though optimism in future sector performance continued to improve, unemployment levels are still high with over a quarter of firms admitting to axing their staff in July.”