UK construction activity fell again in September, as new orders tumbled and the rate of contraction in the housebuilding sub-sector accelerated, according to a survey that adds further gloom over the economy.
The Chartered Institute of Purchasing and Supply's (CIPS's) industry activity index for UK construction edged up from 49.0 in August to 49.5 last month on a seasonally adjusted basis, but stayed below the level of 50 which separates expansion from contraction to signal the second straight month of decline.
New orders for UK construction firms have now fallen for four consecutive months on the CIPS measure – the longest run of decline for three years.
In recent times, the CIPS survey has tended to paint a brighter picture of the sector than data from the Office for National Statistics.
The rate of contraction of output accelerated in both the commercial property construction and housebuilding sub-sectors.
Commercial property construction activity fell at its fastest pace since February 2010, but civil engineering, the other construction sub-sector monitored by CIPS, returned to growth after three consecutive months of decline.
In spite of the fall in overall construction activity, the sector added staff in September for a third straight month, and at a faster pace than in August.
CIPS noted the rate of job creation in UK construction in September was "much slower than its average prior to mid-2008".
It also said confidence levels among construction firms about output levels in the year ahead were "subdued", and among the lowest since the start of 2009. Although the rate of decline of new orders for UK construction eased marginally in September, CIPS noted the fall in incoming business last month was the second-sharpest monthly drop in nearly three-and-a-half years.
Tim Moore, author of CIPS's UK construction survey and senior economist at financial information company Markit, said the report presented "another bleak assessment of business conditions in the sector".
He added: "The current stretch of falling new orders is now the longest seen for three years, reflecting shrinking underlying demand alongside delays in spending from both public and private sector sources.
"A lack of new projects meant confidence in the business outlook remains close to its lowest since the UK economy nosedived into recession during 2008."
While noting temporary factors such as the London 2012 Olympics and the extra holiday for the Queen's Diamond Jubilee in June would "somewhat cloud the interpretation" of third-quarter UK gross domestic product data, he added: "The principal take-out from September's PMI survey is that underlying construction weakness is likely to continue for the remainder of 2012."
A survey from CIPS on Monday showed UK manufacturing activity continued to fall last month.
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