UK construction activity still weak, PMI survey shows

image captionOnly the civil engineering sector recorded growth in October

Output in the UK construction sector was fractionally higher in October, a survey had indicated, but new work and employment shrank.

The Markit/CIPS Construction Purchasing Managers' Index rose to 50.9 from 49.5 in September, just above the 50 mark that separates growth from contraction.

But new orders fell for a fifth consecutive month and firms cut jobs at the fastest rate since August 2011.

"The bigger picture remains bleak," said Markit economist Tim Moore.

"The year-ahead business outlook was still relatively subdued during October, as survey respondents cited weak spending patterns and squeezed budgets among clients," Mr Moore said.

Within the construction sector, only civil engineering saw growth in October, a second consecutive monthly rise.

Residential building activity was the weakest performing sub-sector, with output declining for the fifth successive month. Commercial activity also dropped in October.

'Long, dark winter'

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, was pessimistic about the future.

"Despite marginal growth in October, the prospects for the construction sector are bleak as firms prepare for the worst," he said.

"They are heading into a long, dark winter, by shedding jobs and laying off sub-contractors in response to the longest decline in new business since the start of the financial crisis.

"There is contagion right along the supply chain with rising fuel and energy costs and lengthening delivery times ensuring there is little hope of respite in the immediate future. All of this compounds the imminent threat of budget cuts in 2013."

The PMI survey was released on the same day that the National Institute for Economic and Social Research (NIESR) economic research group warned that the recovery generally remained weak.

In its report, NIESR downgraded its UK growth forecast for next year to 1.1% from 1.3%, due to a weaker global outlook.

NIESR economist Simon Kirby described current business investment as "shockingly low", noting that it was 14% below pre-recession levels.

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