Construction activity falls at slowest rate for two years

UK construction activity fell at slowest rate for almost two years last month according to figures from the Chartered Institute of Purchasing & Supply.

The CIPS/Markit construction purchasing managers’ index stood at 48.6 during January, up from 47.1 in the previous month, signalling the smallest fall in activity during the current 23 month period of contraction.

Housebuilding was the only one of the three broad areas of construction activity monitored by the survey to record growth in January. However, the rate of expansion eased sharply from December’s strong pace.

Continued declines in commercial and civil engineering activity were reported, although in both cases the rates of decline eased.

Firms are now measuring performance from such a low base level that there’s a general consensus things can’t get much worse

David Noble, chief executive officer at the CIPS

Commenting on the findings, David Noble, chief executive officer at the CIPS, said: “Construction continues to be the worst performing sector of the UK economy – struggling in the face of credit supply shortages and overall economic uncertainty”.

He added that although the rate of decline slowed, competition is still intense. “Operating conditions are tough and firms are now measuring performance from such a low base level that there’s a general consensus things can’t get much worse.

"Particularly disappointing is the slowdown in housebuilding as this has been one of the few bright spots in recent months”.