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Is UK Construction Looking Up After Improved PMI Figures?

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CIPS  Markit Chartered Institute of Purchasing and Supply  Brian Berry  David Noble  Federation of Master Builders  Purchasing Managers Index  PMI 

Is UK Construction Looking Up After Improved PMI Figures?

By - Friday 11 November 2011

When the latest figures from the Markit/Chartered Institute of Purchasing and Supply (CIPS) Purchasing Managers Index (PMI) for the construction sector were released at the start of this month, an unexpected improvement in the sector was recorded. The PMI recorded an increase in buying activity, as well as more robust performances from the civil engineering and commercial industries. However, the housing market still lags behind and chief executive officer at CIPS David Noble was cautious about the prospects going forward.

He noted that the October rebound came after "a broad stagnation in September" and stated: "It's still nothing to get excited about". Mr Noble continued: "Due to current economic conditions, it may be some time yet before we start seeing the sustained growth the sector really needs." He pointed out that those working in the construction industry are aware of the challenges they will face over the coming months, adding that this is one of the reasons why confidence in future business activity hit an almost three-year low last month.

Director of external affairs at the Federation of Master Builders Brian Berry agrees with this sentiment, stating that if you look closely at the overall performance of the construction industry "you can see some real serious concerns in terms of the housing market and the lack of confidence in government's public spending". He described the October figures as "a small blip" and stressed that worries about the effect of Whitehall reductions in spending on infrastructure and public services are mounting.

Mr Berry also pointed out that headlines heralding a five-month high for the construction PMI may be overly optimistic, as the index improved from "a very low benchmark". He predicted that businesses in the industry will have a challenging time until 2013-14 and expects the data for November to be less positive reflecting "the state of the housing market and cutbacks in public service spending".

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