U.K. Construction Slows
LONDON—Activity in the U.K.'s construction sector was all but stagnant in September as new orders fell, dragging down the pace of growth in other sub-sectors measured by an index published by Markit Tuesday.
The construction purchasing managers' index slowed to 50.1 from 52.6 in August, amid the first fall in orders since February 2010. A level above 50 indicates expansion, while below signals contraction.
The index, compiled by the Markit financial information firm and the Chartered Institute of Purchasing Managers, was based on a survey showing new orders fell and output slowed.
"U.K. construction companies continued to struggle in the face of growing concerns about the wider economy, with weaker client confidence leading to a reduction in new business received during September," said Sarah Bingham, economist at Markit. "While growth for the third quarter as a whole was modest, it was slower than the expansion recorded in the second quarter, adding to worries that the overall U.K. recovery has lost further momentum from the lackluster GDP growth seen in the second quarter."
And yet the manufacturing sector as a whole showed surprising resilience in September, with the PMI index rising unexpectedly to 51.1 after two months of contraction. The stall in construction underscores the weaker level of confidence and activity across many parts of the U.K.'s economy.
"Delayed and cancelled projects, more competitive tendering, and general uncertainty over economic conditions are putting a dampener on things, resulting in the first reduction of new orders in 19 months," said David Noble, chief executive officer at the CIPS.
The survey also shows that overall staffing levels rose slightly from August, while prices paid by firms for raw goods rose markedly. By sector, residential construction fared the worst in September and commercial construction activity increased.