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Thursday 04th of February 2010
February 2, 2010    

Construction industry contracts at slower rate

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by Kay Murchie

There were further hopes of a strong recovery today after the Chartered Institute of Purchasing & Supply (CIPS)/Markit purchasing managers’ index (PMI) rose to 48.6 in January, up from 47.1 the previous month - the smallest fall in activity during the current 23-month period of contraction.

The figures came just a day after the CIPS/Markit manufacturing PMI revealed UK manufacturing activity rose at its fastest rate in 15 years in January.

Both sets of figures will boost hopes that the economic recovery is gathering pace after last week’s disappointing fourth quarter GDP figures.

Meanwhile, returning to the construction activity figures, the index is heading towards the crucial 50 mark, which represents growth. The index is rising rather than falling and while the commercial and civil engineering sectors continued to fall, the rate of decline eased.

Housebuilding posted growth in January but the pace of expansion eased sharply from December’s strong pace.

Commenting on the figures, David Noble, chief executive of the CIPS, said: “Construction continues to be the worst performing sector of the UK economy, struggling in the face of credit supply shortages and overall economic uncertainty.

“Purchasing managers said the widespread chaos caused by the snow in January didn’t help an already fragile industry with new orders disappointingly low,” he added.

Figures for the closely-watched service sector will be published tomorrow.

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