Construction output shrinks

THE construction sector saw a marked decline in output last month, according to new figures.

The purchasing managers’ index fell from 50.9 to 49 in August – its lowest level since February 2010. Figures under 50 suggest a contraction.

Commercial construction fell for the first time in two-and-a-half years but it was the residential sector which was markedly hit.

David Noble, chief executive at the Chartered Institute of Purchasing and Supply, said: “This is dire news for the construction sector which saw its fastest drop in new orders for over three years. Undoubtedly the Government will come under more pressure to help the sector and implement Sir Adrian Montague’s proposals to kick-start house building, when it responds later this year.

“Both the decline in commercial activity and the significant drop in new orders are particularly worrying. The commercial sector had previously been propping up the figures and the lack of new contracts suggests things will get worse before they get better.

“Inevitably confidence has also been hit hard, and it has not been recorded as low as it is now, since last October. For good reason too, as it’s clear that tough times still lie ahead.”

The data suggests headcounts in the sector remained level in August and while purchasing activity declined supplier lead times also lengthened.