A fall in new orders and slow output growth have dented confidence in the sector

Construction companies embarked on the sharpest round of job cuts since January last month as a fall in new orders dented confidence in the sector.

The Market/CIPS construction PMI report for June reveals that firms are less optimistic about future growth as new orders fell and output growth slowed in the traditionally busy summer month.

Markit economist Sarah Bingham said: ’The worry is that the level of business confidence has fallen to a six-month low in the sector, which suggests that companies are expecting growth to weaken over the next twelve months. That is perhaps not altogether surprising given a marked easing in the rate of expansion of new business inflows in June.”

David Noble, chief executive officer at the CIPS, added: “A solid reduction in employment indicated that firms are meticulously managing their costs, and prospects for any future expansions in output growth look moderate at best with confidence weakening.”

The Markit/CIPS construction PMI index dipped to 53.6 points from 54.0 points in May, in line with City forecasts.

The report said commercial and civil engineering companies saw output rising but house building shrank for the second time over the past three months.
Bingham added: “June data rounds off a further solid quarter of growth, albeit down on the first quarter. This contrasts with the surprising weakness seen in the official data for the first three months of the year.”

Last week government statistics revealed construction output contracted 3.4% in the first quarter in sharp contrast to the expansion signalled by PMI reports over the same period.