-Markit Says Drop On Month Sharpest Since Feb 2009
-Notes Marked Loss Of Momentum From Previous Survey Periods
LONDON (MNI) – UK construction saw its sharpest fall in 2 1/2
years in June, according to the Markit/CIPS construction sector PMI
released today.
The seasonally adjusted Markit/CIPS Construction Purchasing
Managers’ Index stood at 48.2 in June, down from 54.4 in May. The drop
in the index over the month was also the greatest since February 2009.
Markit said that this signalled “a marked loss of momentum
following the solid expansion seen in the previous survey period”.
Markit said there had been anecdotal evidence suggesting part of
the decline was due to the extra Jubilee bank holiday in June.
On the plus side for the industry, input price inflation was much
weaker than in May. Survey respondents pointed to lower fuel prices
helping to offset increased costs for raw materials.
Construction firms on balance expect an increase in business
activity over the next 12 months. That said, positive sentiment was well
below the long-run survey average, and the latest reading was the lowest
since October 2011.
Respondents also noted weaker business fundamentals. Civil
engineering and housing activity were the worst performing sub-sectors.
Both of the latter saw a drop in output for the first time since the
weather-affected downturn in January. Commercial activity saw only a
marginal increase and at the slowest pace for 28 months, Markit said.
Other components of the survey also pointed to fundamental
weaknesses:
The June data showed a moderate drop in new work received, ending
an eight-month period of expansion. The rate of decline was the fastest
since April 2009.
Reports from survey respondents generally pointed to uncertainties
about the economic outlook and a lack of new work to replace existing
projects, alongside the need to cut costs This resulted in a marginal
decline in construction employment. This was the first fall in workforce
numbers since February.
Sub-contractor usage also declined in June, and at the sharpest
pace since August 2011.
Input buying in the construction sector decreased during June for
the first time in a year-and-a-half, although the rate of reduction was
relatively modest.
–London newsroom: + 44 207 862 7492; email: ukeditorial@marketnews.com
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