The number of orders for new construction projects fell for the fourth consecutive month in September, despite a rise in civil engineering activity. The construction sector accounts for just 7 per cent of the UK economy, but its poor performance over the course of the year has contributed to the dip back into recession.
The news comes following the publication of the Markit purchasing manager’s index survey of the construction sector which shows a fall in both residential and commercial developments. David Tinsley of BNP Paribas believes the figures give little cause for optimism.
“Certainly the residential property market is only likely to pick up gradually in current months, while occupier demand for commercial property has been weakening, which supports continued downward pressure on new supply. We do not expect construction to make as large a detraction from gross domestic product going forward but it is not likely to be adding much to growth either,” he said.
There are, however, a few positive indicators within the figures. The employment index within in the sector improved marginally and companies are not as pessimistic about the future as might be expected. Despite these rays of hope, there is no disguising the fact that activity is low and is likely to remain so for some time to come.
David Noble, of the Chartered Institute of Purchasing and Supply, says the construction sector has experienced a “disastrous quarter.”
He added; “Looking ahead, there is little to be positive about. Homebuilding continues to be hit hard, the commercial sector, so long the star of the industry, has lost its sparkle.”
The construction index comes after an equally downbeat survey of the manufacturing sector. Together they suggest that, despite some encouraging news, the economy still has a long way to go towards recovery.
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