05.01.2004

Growth in UK construction remains strong

Growth in the dynamic UK construction business cooled a touch in December, but the sector still retained its shine, the key monthly CIPS survey says.

CIPS announced today that its purchasing managers' index for construction output dropped to 59.2 last month, from 60.5 in November, the highest fall since June 2001.

The fall was largely due to delays between the completion of existing contracts and the start of new ones. Despite the slowdown, the index remained well above the critical no-change mark of 50 that divides growth from contraction for the 59th successive month.

"Purchasing managers continued to scale up their activity in December as the construction sector experienced further strong growth," said Roy Ayliffe, CIPS's director of professional practice.
"This expansion was largely driven by increased levels of new business as confidence picked up in the UK economy."

Over the quarter as a whole, growth of construction activity during the final three months of 2003 showed its sharpest rise since the second quarter of 2000.

New construction orders and housing activity were the key drivers behind the sector's growth. The seasonally adjusted Housing Activity Index fell back slightly to 63.7 from 69.8 in November.

New orders rose to 61 in December from 59.2, the highest since July 2001. This suggests that the sector will continue to enjoy robust growth in coming months.

Most construction companies were optimistic in December that activity levels would rise this year, with the Future Business Activity recording a very robust 76 in December.

The report states that "confidence was generally boosted by the anticipation of improved business conditions in the UK and planned expansions."