Fragile growth recorded, but job losses mount

9 April 2010

Construction activity has expanded for the first time in more than two years, according to the Chartered Institute of Purchasing and Supply.

A survey by the CIPS reveals the first growth since February 2008, with the strongest performance in house-building, Building reported.

Its monthly survey of contractors and construction purchasers recorded an index of over 50 for the first time since February 2008, rising almost five points to 53.1. Any figure above 50 indicates a growth in activity. 

Growth came from a rise in new orders with the house-building sector displaying the strongest performance by far, with the seventh rise in successive months.

Construction News highlighted that commercial-based activity also increased during March, with growth reported for the first time since February 2008. However, work in the civil engineering sector continued to decline. 

Incoming new orders increased during March for the first time in four months and only the second time since February 2008.

However, there were reports that opportunities to tender remained low when compared to pre-recession levels.

And a further sharp decline in employment within the UK construction sector during March highlighted the fragility in the current upturn.

Job cuts were largely attributed to redundancy programmes, with staffing levels showing no signs of stabilising despite rises in activity and new orders.

CIPS chief executive David Noble said: “Though it’s great to see the UK construction sector turn the corner after two years of relentless contraction, it’s still very early days. The recession hit construction the hardest and because the industry is operating from such a low base, this upturn may be short-lived.

“Purchasing managers noted an emerging public/private sector divide as the General Election looms closer. 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.”

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