UK construction sector shrinks for 22nd month in a row

Activity in Britain’s construction sector contracted for the 22nd month in a row in December as demand dried up.

The Chartered Institute of Purchasing & Supply (CIPS) said today that its purchasing managers’ index (PMI) rose to 47.1 last month, up from November’s reading of 47. A mark below 50 signifies contraction.

CIPS’s chief executive, said: “December was another disappointing month for the UK construction sector. Unlike other parts of the economy, it seems unable to escape the shackles of the recession, as it entered its 22nd successive month of decline.

“Purchasing managers painted a bleak picture as firms suffered from reduced client demand and falls in new business. As a result, contractors are competing aggressively to secure the relatively fewer new contract tenders there are in the market.”

Construction firms continued to shed jobs in December as work dried up. CIPS said many construction companies reported they were still restructuring their operations in line with lower workloads.

However, they added that there were some glimmers of hope as the residential sector showed a marked improvement in activity, with growth indicated for four consecutive months. “This suggests that the increase in house prices last year is beginning to have an effect on construction and encouraging new building,”

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