New low for UK construction industry

The UK construction industry suffered a record decline in December, with all sectors of the industry suffering their worst contraction on record.

The latest figures from the Chartered Institute of Purchasing and Supply (CIPS)/Markit construction index revealed a fall to 29.3 from November’s 31.8.

This was the 10th successive month that the index has been below 50, which is the level indicating contraction in the industry.

Activity fell sharply across all three sub-sectors of the construction industry. Housing suffered the sharpest decline, while both civil engineering and commercial construction fell at record rates in December.

The level of new orders placed with UK constructors fell at the steepest rate in the history of the index. Companies indicated that tender enquiries had dried up in response to uncertain economic prospects. There were also reports that fears of a prolonged economic downturn had led a number of clients to postpone or in some cases cancel, planned project developments.

Gemma Wallace, economist at Markit, said: “Severe falls in demand, alongside intensified competition, drove down the success rate of submitted tenders and contributed to a series-record drop in new orders."

The rate of job shedding remained considerable throughout the month.

Roy Ayliffe, director of professional practice at the CIPS, said: “Amidst a climate of doom and gloom, firms were forced to axe more jobs in preparation for what is set to be another year of trouble and turmoil.”

In addition, the second-sharpest fall in sub-contractor usage, and a steep rise in availability, led sub-contractors to lower their rates for a fifth month in succession, and at a survey-record pace in December.