Construction downturn widens out to commercial and industrial sectors as well as the public sector
(09/03/2009)

The latest CIPS Construction survey demonstrates the construction industry is contracting at the fastest pace since series began. The CIPS Construction Purchasing Managers' Index (PMI) dropped to 27.8 last month - the lowest level since the survey began in April 1997. Any number below 50 indicates a fall in activity.

RICS Chief Economist Simon Rubinsohn commented: "The appalling figures contained in the latest CIPS Construction survey chime with the results of the recently released RICS survey. While initially the downturn was concentrated in housebuilding, it has now widened out to both the commercial and industrial sectors as well as the public sector. This underlines the importance of the government's plans to provide additional funding for stalled PFI projects. Without some action to support the construction sector, the risk is that the fallout in this key area of the economy could be worse than in the downturn of the early 1990s."

He added "Construction output data relating to the fourth quarter of last year demonstrate the intensifying pressure on the sector. Production dropped 7% compared with the previous three month period and was 8.5% down on the high watermark reached in the first quarter of 2008. The biggest quarterly fall was predictably enough in new housing work although this was partly offset by a modest increase in repair and maintenance work. New orders data for the sector suggests that construction output is set to fall further over the course of 2009. Some comfort may, however, be drawn from the government's recent decision to support existing PFI deals which are struggling to secure requisite funding from the private sector."