UK construction shows first growth since 2008

Construction activity grew in March for the first time in more than two years on the back of a resurgence in housebuilding, according to figures published today.

Despite job cuts across the sector continuing at a sharp rate, growth in new orders fuelled an upturn in construction activity and fresh optimism among the sector, according to the Chartered Institute of Purchasing and Supply (CIPS).

The CIPS/Markit Construction Purchasing Managers' Index, which measures construction activity, rose to 53.1 points in March, up from 48.5 in February and the first month it has grown since February 2008.

After two years of contraction, the upturn in construction was led by an increase in commercial property and housebuilding, which recorded the seventh rise in successive months.

Yet civil engineering, an important sub-sector which is driven primarily by public spending, remained in decline and actually increased its pace of contraction during March.

However, David Noble, the chief executive of CIPS, warned against the longevity of the apparent turnaround. "The recession hit construction the hardest and because the industry is operating from such a low base, this upturn may be short-lived," he said.

"While overall industry improvement was bolstered by private sector expenditure - especially in the housing and commercial sectors - it's worrying to see civil engineering contracting, given that mooted public sector spending cuts are yet to kick in.

"Dwindling head counts, as firms laid off staff at a quicker pace, coupled with weakened confidence about future business performance, suggests that the construction industry still has some concerns over the stability of the recovery."

The data is a welcome lift for Gordon Brown, who today formally asked the Queen to dissolve Parliament, setting the general election for May 6. The Prime Minister is arguing that a Conservative government risks destabilising the tentative economic recovery and sending the country into a double dip recession by proposing huge cost cuts instead of a 1 per cent rise in National Insurance for people earning over £20,000.

Other signs of recovery emerged in March, when it was revealed that GDP rose 0.4 per cent in the last three months of 2009, revised up from initial figures of 0.3 per cent, indicating that Britain emerged from recession more strongly than previously thought.

Meanwhile, headline figures on manufacturing output from the Purchasing Managers' Index last month suggested that manufacturing in UK factories is growing faster than in China, although economists were quick to point out that the underlying data released by the Office for National Statistics was far less upbeat.

Data from the same index showed that export orders grew at a slower pace in March than in February, although Scotland posted an upturn in exports of 2.9 per cent for the last quarter of 2009.

 

Source - Times Online

Posted Date: 06th Apr 2010