Purchasing managers index rebounds from stagnation in September despite weak outlook
Construction purchasing rose to a five month high in October, according to the latest data from the Markit/CIPS survey of purchasing managers.
The construction purchasing managers’ index rose to 53.9 in October from 50.1 in September, on a scale where any number above 50 represents growth in construction purchasing.
The survey said the increase was based on growth in the commercial construction sector, with stagnation recorded in the infrastructure sector and decline in housing. The rise, the strongest since May, comes after official GDP figures released by the ONS yesterday showed the construction economy had contracted by 0.6% in the last quarter.
Despite the rise, the survey nevertheless found that business confidence was at its lowest for three years. It said that “uncertainties surrounding the continued strength of private sector demand, and about the effects of public spending cuts, had dampened confidence.”
Use of subcontractors also declined, despite new orders picking up in the month.
Sarah Bingham, economist at Markit, said: “The outlook for the sector remains uncertain, with October seeing a further weakening in sentiment regarding business expectations; confidence was at its lowest level since December 2008. Furthermore, the increase in employment recorded was fractional, despite the rise in new business and activity. This suggests that constructors remain tentative about the longevity of the sector’s growth profile.”