CONSTRUCTION industry output slumped last month as severe weather hit work on building sites across the UK.
The latest UK construction Purchase Managers’ index dipped below 50 during December, taking the index to 49.1 from 51.8 in November – well below the 2010 peak of 58.5 in May when a recovery in private construction was reinforced by public spending.
Yorkshire Bank economist David Tinsley said: “Undoubtedly, the adverse weather in December was largely responsible for the dip. It’s pretty hard to put a shovel in the ground when it is frozen solid – and we can expect some rebound in the data for January, assuming the weather remains better.
“In fact, the detail of the PMI release is not all bad, with a rise in new orders over the month and commercial construction maintaining some expansion in activity.
“But from here any rebound in the early months of 2011 is likely to come around a declining trend in the pace of overall construction output. The official new orders series shows a sharp fall off in public sector orders – with public sector orders outside of infrastructure falling by 23% in the third quarter.
“Infrastructure projects themselves are being squeezed by the cutback in capital spending revealed in the Budget – and some of the Olympic investments are by now past their peak of activity.
“There are still some signs of life in commercial construction, with orders up, but private house building also remains depressed. So the sector as a whole will probably do well to make a positive contribution to overall GDP growth in 2011.”
