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Construction industry sees slight improvement in activity

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by Kay Mitchell

As property prices have plummeted, the UK construction sector has been badly affected with new orders falling and projects put on hold.

Housebuilders have been announcing severe falls in profits and substantial job losses recently but it seems there may be a light at the end of the tunnel after the latest Chartered Institute of Purchasing and Supply/Markit construction PMI index rose to 38.1 in April, up from 30.9 in March - the highest level in seven months.

However, the PMI remains below the 50 mark which indicates no change in activity levels.

According to Howard Archer, economist at IHS Global Insight, “the purchasing managers’ survey offers hope that the rate of decline in construction activity is moderating.”

In the meantime, optimism last month among construction companies rose with the majority of respondents expecting business conditions to improve over the next 12 months.

Roy Ayliffe, a director at the Chartered Institute of Purchasing & Supply (CIPS), said: “The darkness that has been gathering across the UK construction economy over the past 13 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.”

However, despite the positive news, the CIPS cautions that recovery is still a long way off in the construction sector.

Gemma Wallace of Markit said it will take a lot more to restore confidence and demand in the sector. However, today’s figures represent “a step in the right direction“.

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News posted: May 5, 2009

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