Decline in UK construction activity slowed markedly in April as optimism in the industry rose to its highest level for almost a year, an industry survey revealed today.
The Chartered Institute of Purchasing and Supply’s (CIPS) purchasing managers’ index jumped from 30.9 in March to 38.1 last month - although the sector is still deep in recession as a score under 50 signals contraction.
It marks a seven-month high for the index, leading to hopes that the worst of the recession in construction may be over.
Housing, commercial and civil engineering output all rose in the month, but all were still well below the 50 mark.
Confidence climbed to its highest level since last June, with the majority of respondents expecting business conditions to improve over the next year.
Company expansions, promotional activity and the start of postponed projects were all cited as reasons for an upturn in optimism.
This fed through to employment, as firms shed staff less rapidly than in previous months.
Housing was the worst performing area of construction and survey partner Markit said the industry would find it difficult to recover as concerns persist over falling house prices and a lack of credit availability.
CIPS director Roy Ayliffe said: “The darkness that has been gathering across the UK construction economy over the past 13 months lifted slightly in April but, against a backdrop of ongoing market uncertainty, fewer new orders and fierce competition, blue skies are still a fair way off.”
New orders continued to fall steeply in April, with respondents blaming unfavourable market conditions, depressed demand and intense competition.
Nevertheless, CIPS noted that the rate of contraction in new orders had “weakened considerably” since March to the slowest for eight months.
Howard Archer, of IHS Global Insight, said the survey added to recent signs that “the rate of UK economic decline could now be moderating”.
He said the sector was helped to some extent by accelerated government infrastructure spending.
“However, with the housing market and commercial property sectors still under serious downward pressure, it is hard seeing the sector returning to growth anytime soon,” he added.
PA