June data reveals fall in activity for sixteenth month in row

The contraction in construction work steepened in June, raising fears of a “W”-shaped recession, according to the latest data from the Chartered Institute of Purchasing and Supply.

The institute's monthly construction index fell to 44.5 in June, on the index that measures whether purchasing levels are increasing or decreasing. Any figure below 50 marks a decrease.

This is down marginally from the 45.5 recorded in May, which was the highest index score for a year, and was seen at the time as a sign the recession was easing. However the fall back this months means the index has been below 50, representing a contraction in the industry, for 16 months.

CIPs said each of three construction sub-sectors - housing, commercial and civil engineering - also recorded a fall in activity over the month. However, CIPS said the marked increase in confidence over future orders in May had continued into June.

David Noble, chief executive at CIPS, said: “Against the backdrop of difficult market conditions the UK construction sector is on a knife edge. After the improvements seen in April and May, the sector has retracted as firms battle to consolidate their position in the tough market. This data adds to speculation of a 'w-shaped' recession.”