Activity index hits new low as crisis spreads beyond housing

Construction industry confidence has plummeted to record lows in November, according to figures from the Chartered Institute of Purchasing and Supply (CIPS).

While housing remained the worst hit sector, CIPS said that civil engineering and commercial output both contracted at the fastest rate since the survey began in April 1997.

Construction activity, measured on the basis of feedback from purchasers in the sector, was down from 38.8 in October to 31.8 in November – an all-time low.

The index uses 50 as a base, with any figure lower than 50 representing a contraction in the industry, and any figure above representing growth.

The November figure of 31.8 compares starkly with a rating of 57.4 a year ago.

The body's new orders index also registered a steep fall, posting 34.9, down from 41.2 in October. Subcontractor availability and quality of work improved at a record pace, while rates charged fell quicker then previously recorded.

The employment index fell to 31.2 and the index measuring the price of raw materials fell to 44.7, another record low, and the first time it has contracted in a decade.

The only bright spot was a slight improvement in business confidence on the back of the Bank of England's decision to cut interest rates by 1.5% in October. The future business activity index rose to 51.

Roy Ayliffe, director of professional practice at the CIPS, said that significant falls in new orders, industry output and employment, provide yet further evidence of the deterioration in the sector.

“There was, however, some relief for builders as input prices fell for the first time in nearly a decade. Coupled with this, the Bank of England's interest rate cut provided a glimmer of hope and helped bolster sector confidence,” he said.