Survey reveals dramatic falls in building activity, client budgets and customer enquiries

The construction sector is shedding jobs at record rates as it remains in deep recession, according to the latest survey from the Chartered Institute of Purchasing & Supply (CIPS).

The body said steep falls in building activity were recorded across all monitored construction sub-sectors in March, leading to the fastest rate of job losses in the survey’s 12 year history.

Those surveyed by CIPS and Markit Economics reported a sharp reduction in client budgets, strong competition to secure new contracts, fewer customer enquiries and a lower success rate on submitted bids since February. Housing suffered the biggest contraction, while civil engineering fared best.

However, the decline in output was “noticeably slower” in March than in February and the Construction Purchasing Managers’ Index rose to 30.9, up from 27.8 the previous month, CIPS said. UK contractors were “confident” of improved operating conditions in the next year, it added.

But the body said the figures “remained at a level consistent with a rapid decline in overall business activity” and warned it was too early to talk about recovery.

CIPS director Roy Ayliffe said: “Unremitting global forces continued to batter the UK construction sector in March. Purchasing managers reported further falls in overall construction activity with housing, once again, faring the worst. Inevitably, extremely weak demand led to a significant loss of construction jobs. Firms not only reduced contractors’ days but also cut headcount at an unprecedented pace.”

Gemma Wallace, economist at Markit Economics, added: “March data showed rises in the Total Industry Activity, New Orders and Quantity of Purchases indices. However before false hopes are raised of a stabilisation in the downturn of the UK construction industry, the recent, fluctuating nature of these indexes should be taken into account. As they remain at historically low levels, it is still too early to suggest that the sector has started on the road to recovery.”