New construction orders plummet

Latest data has indicated a sharp contraction of the UK construction economy during February.

The CIPS/Markit UK Construction Purchasing Managers’ Index (PMI) fell to 27.8 in February, after rising slightly during the previous month.

Total business activity fell at an unparalleled rate in the survey’s history, while declines in new orders, employment and purchases all accelerated.

Underlying the quicker decline in output was an accelerated retrenchment in new orders. Companies reported fewer enquiries and opportunities to tender and reduced success rates on submitted bids. New work placed with UK constructors has now fallen throughout the past year.

In addition, business conditions were reported to be generally tougher and, with uncertainty and soft market demand persisting as prominent issues for most firms, positive sentiment across the sector remained very subdued by historical standards.

Output declined at faster rates across all three monitored sub-sectors of the UK construction economy. Housing remained the weakest industry, although the commercial sector did not fare much better during the latest survey period.

Both employment and sub contractor usage suffered as output and new orders dropped. Attrition and redundancies were the principal methods of streamlining workforces. Staffing numbers shrank at a considerable pace as a result, although not as quickly as during December.

Optimism with regard to activity levels over the coming year was still somewhat weak in historical terms as business conditions remained difficult.

Roy Ayliffe, Director at the Chartered Institute of Purchasing & Supply, said: “Abysmal February data from the UK construction sector marks a whole year of decline in the industry and has put paid to any hopes of improvement following a slight rise in the PMI index last month.

Aycliffe added: “House building performance was appalling amid reports from numerous constructors about the impact that the difficulty in securing mortgages was having on demand. Meanwhile commercial activity took a further tumble - falling at the fastest rate in the survey history.