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Saturday 08th of January 2011
January 5, 2011    

UK construction activity in surprise contraction in December

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by Kay Murchie

The Chartered Institute of Purchasing and Supply (CIPS)/Markit construction purchasing managers’ index (PMI) has today revealed UK construction activity contracted unexpectedly in December.

The Purchasing Managers’ Index slumped to 49.1 in December, from 51.8 in November - the first fall since February last year and surprised analysts.

The latest figures mean the index is now below the crucial 50 level, which separates growth from contraction.

However, the drop was attributed to the bad weather during the month.

Activity in the commercial building sector rose while housebuilding and civil engineering activity declined.

However, new orders growth improved slightly but is still below its long-term average.

Construction accounts for around 6% of Britain’s economic output.

Meanwhile, the index comes shortly after figures revealed UK manufacturing activity surged at a record pace in December.

The closely-watched CIPS/Markit manufacturing PMI rose to 58.3 in December from November’s revised reading of 57.5.

Not only was the reading the highest since September 1994, it confounded analysts expectations of a reading of 57.

Furthermore, the manufacturing index continues to stay above the 50 mark and it has been above this level for 17 consecutive months.

The UK’s service sector activity index will be published later this week.

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