Latest Markit/CIPS index shows decline in commercial activity but pick-up in residential

state of play

UK construction output contracted in April for the six month in a row, according to the latest Markit/CIPS Purchasing Managers’ Index.

The index edged up from 47.2 in March to 49.4 last month, but remained below the 50 mark that separates contraction from expansion.

But the index, which measures overall output in the sector, signalled only a marginal contraction in April, with the rate of decline the slowest in the current six-month period of falling activity.

Tim Moore, senior Economist at Markit, said the pick-up in activity “reflected an element of catch-up after some severe weather delays earlier in the year”.

The survey found that output in the commercial sector dropped for the third month running, while civil engineering projects also “decreased markedly”.

The survey found a marginal rise in residential activity, which was nonetheless the sharpest increase since April 2012.

Moore said: “UK construction sector output was closer to stabilisation than at any time since October 2012, according to the latest survey data. A slower decrease in output reflected an element of catch-up after some severe weather delays earlier in the year.

“Total construction output was mainly supported by higher levels of residential building activity in April. Some firms cited a boost to output volumes from contract wins on new house building schemes.

“Civil engineering remained the weakest construction sub-category, with public sector order inflows scarce outside of big-ticket infrastructure projects.

“The overall survey findings are an early indication that construction will act as less of a drag on UK GDP over the second quarter of 2013. April’s data also highlights a cautious degree of positive sentiment about the year-ahead outlook.

“However, total new work dropped for the eleventh month running during April, which further reduces the likelihood of improving in employment.”