Sharp fall in new orders drags UK construction PMI lower -UPDATE
Tue 02 Oct 2012
LONDON (SHARECAST) - -Output declines during August amid marked fall in new work
-Second-sharpest fall in new business since April 2009
-Outlook at weakest since before mid-2008
-Input price inflation accelerates
The UK construction sector purchasing managers’ index for the month of September has come in at 49.5 points, versus the previous month’s reading of 49.
The consensus estimate had been for an increase to 49.8, while the long-run average for the series comes in at 54.2.
The fall in new business inflows was the second-sharpest rate in almost three-and-a-half years (sub-index rose 47.6 from 47.3) .
In turn, that led to subdued confidence about the year-ahead outlook for output in the construction sector (increased to 1.5 points to 55.7), Markit says. The degree of positive sentiment about the prospects for activity was among the lowest seen since the start of 2009.
Staffing levels actually increased in September (to 52.2 from 50.1), following stagnation during the previous survey period.
Lower workloads resulted in another drop in input buying across the UK construction sector during September. Delivery times from vendors lengthened markedly, which construction firms widely linked to low stocks at suppliers.
Input price inflation meanwhile accelerated for the third month running to its highest since March (to 57.7 from 56.7), driven by increased costs for fuel and a range of raw materials during the latest survey period.
Residential building was the worst performing broad area of the UK construction sector during September (fell to 45.3 from 46.6). Commercial activity also dropped (falls to 49 from 49.7), and at the fastest rate for just over two-and-a-half years. A return to civil engineering growth (up to 52.5 from 47.3) after four months, nonetheless, helped soften the overall downturn in construction output.
For economists at Barclays Research, “the construction PMI remains consistent with slowing activity in the sector. Although the index has seen a marked deterioration since the start of the summer, it still remains consistent with activity growth stronger than suggested by the official data. As a result, we see the current downward trend as the survey catching up with the official data, rather than renewed weakness in the sector. We think that construction activity is likely to remain soft in the near term as a combination of a weak housing market and low levels of public and private investment will likely work together to dampen the flow of new work for the sector.”
LONDON (SHARECAST) - -Output declines during August amid marked fall in new work
