Construction Sector Confidence High Despite Lower New Orders and Fewer Employees

The latest seasonally adjusted CIPS/Markit Construction Purchasing Managers’ Index (PMI®), released today was:

• 46.7 in September, down from 47.7 in August. A figure below 50 indicates contraction and makes September’s figure the 19th consecutive month the construction sector has contracted.
• Incoming new business recorded only a slight reduction, recording its slowest rate of contraction sicne the nineteen-month period of decline began. Competitive pricing and client budget constraints being seen as the main causes.
• Expectations for business activity in twelve months’ time were positive with anticipated improvements in future economic conditions boosting confidence.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:

“One of the few glimmers of hope appeared in the housing sub-sector which registered a marginal rise in activity for the first time in twenty-two months. Moreover, as commercial and civil engineering showed further signs of decline, this collectively highlights the volatility of the UK construction industry”.

Press Release: Markit Economics [PDF]

Note: The index is a “diffusion index”, it is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. Results will vary around the 50.0 “no-change” level. Readings above 50.0 signal an improvement, readings below 50.0 a deterioration. The greater the divergence from 50.0, the greater the rate of change anticipated by respondents.

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