–Aug CIPS Construction Index 52.1 Vs 54.1 In July

LONDON (MNI) – The Markit/CIPS construction industry data for
August added to evidence of a marked slowdown in output in the third
quarter compared to the second.

The Markit/CIPS Construction Purchasing Managers’ Index for August
came in at 52.1, down from 54.1 in July, the third consecutive monthly
decline from the index’s May high.

While the three broad UK construction sub-sectors reported activity
above the 50 breakeven level in August, the CIPS/Markit survey found
growth in the residential construction sector slowed markedly.

Construction employment also decreased for a second successive
month.

In the second quarter construction was one of the motors behind
above trend UK GDP growth of 1.2% on the quarter. Construction output,
which accounted for 6.3% of GDP, rose by 8.5% on the quarter and 7.7%
on the year. This made it the fastest growing sector of the economy.
The Q2 construction output rise was the fastest such quarterly rise
since 1982 Q1.

These latest data, however, following the Markit/CIPS August
manufacturing PMI, which showed manufacturing activity falling to its
lowest level since November, will add to the belief Q3 output will be
well below that in Q2.

“Those who are looking for signs of a slowdown will find plenty to
worry about in this month’s construction PMI. The most disturbing is the
marked slowdown in the residential sector as this is where much of the
recent sector growth has come from,” David Noble, CIPS chief executive
officer, said.

Noble noted there was a slight pick up in public sector
construction, but with spending cuts looming there has to be doubt over
this continuing.

“For the more optimistic amongst us, however, it still looks like
we are entering a period of low growth rather than another recession but
the jury’s still out,” Noble said.

–London newsroom: +44 207 862 7491; email: drobinson@marketnews.com

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