UK construction PMI for August shows weakest new orders since April 2009

The UK’s seasonally adjusted construction purchasing managers’ index (PMI) for August shows the weakest reading for new orders since April 2009, according to data released by independent research company Markit Economics on Tuesday September 4.

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New orders fell to 47.3 points in August, down from 48.4 points in July. As 50.0 points represents a neutral value on the PMI scale, this represents a further drop in new-order activity.

PMI results for the sector overall also revealed further negativity, falling to 49.0 points from 50.9 points in July.

“August data pointed to a renewed downturn in UK construction output and another reduction in new-order volumes, highlighting a continuing deterioration in business conditions across the sector,” the research firm said.

According to Markit, the drop was due to weak demand in the sector, with construction companies citing lower spending by both public-sector and private consumers.

Construction companies are less optimistic now about business outlook than at any time since October 2011, the data group added.

Markit remains pessimistic in its outlook.

“A construction decline for 2012 overall is statistically ‘baked in the cake’,” senior economist Tim Moore said.

“To bring output for the year as a whole up to the total level seen in 2011 would require a rather implausible double-digit growth surge in each of the final two quarters,” he added.

The data also showed that commercial construction was down marginally.

“Both the decline in commercial activity and the significant drop in new orders are particularly worrying,” the ceo of the Chartered Institute of Purchasing & Supply, David Noble, said.

“The commercial sector had previously been propping up the figures, and the lack of new contracts suggests things will get worse before they get better,” he added.

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