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Construction sector weak again
Tue, 07 Feb, 2012
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Construction sector weak again
Thu, 2 Sep 2010, 10:26:00
UK <b>construction sector</b> growth slowed for the third month in a row in August, to its lowest in half a year, doing little to calm fears of a "double-dip" recession. The Markit/Chartered Institute of Purchasing and Supply construction purchasing managers' index (PMI) fell to 52.1 last month from 54.1 in July and 58.4 in June. It had been as high a 58.5 in May, its highest since September 2007. That suggests last week's estimate that a surge in construction activity was behind an upward revision of second quarter GDP from 1.1% to 1.2% may have been overegging it. "While the construction sector still appears to be expanding after suffering extended, deep recession, the further loss of momentum...highlights the fact that the sector faces a very challenging environment," says Howard Archer, chief UK economist at IHS Global Insight. "This will likely cause the sector's recovery to be gradual overall and bumpy." Massive cuts in public spending, to be announced by the coalition government next month, are expected to hurt the industry. "In addition, housing market activity has been weaker so far in 2010, prices are softening and the outlook for the sector is currently looking increasingly worrisome, so this could well weigh down on house building," Archer says. The house building index only just remained in growth mode after tumbling to a 10-month low of 51.1 in August from 57 last time. A read of over 50 indicates expansion. New construction orders slowed again to a six-month low, while business expectations failed to improve much from a recent 16-month low.
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