02/07/2010

Slower Pace As Construction Grows

The pace of growth in the UK's construction sector is slowing down - but more positively - is still rising overall.

June's Markit/CIPS Purchasing Managers' Index for construction showed continued growth, but at a slower pace.

New orders were still being recorded, though unemployment still stayed at the same level as concerns over public spending cuts and VAT increases dampened enthusiasm. June's reading was reported as 58.4, down slightly from 58.5 in May.

David Noble, Chief Executive Officer of CIPS said: "Although the UK construction sector maintained steady growth in June, question marks loom over the sustainability of this recovery in the longer-term.
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"Most tellingly, modest rises in order books did little to boost employment levels, and confidence over future activity dropped.

"Meanwhile, curbing inflation continues to be a big issue facing firms and from our experience they are likely to be nervous about offsetting their higher costs by passing them on to clients. The sector is also bracing itself for another spell of troubled times following the public spending cuts and forthcoming VAT rises announced by the Government last month.

"A stark reminder of just how hard this sector has been hit is the handful of cranes currently dotting the skyline and the half-finished construction projects. Recovery in the second half of the year is likely to remain fragile and we are still a long way off seeing the industry operate the way it did pre-recession."

(CD/GK)

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