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Construction industry hit by contraction

Construction industry hit by contraction
The construction industry in the UK could be in for troubled times after a new report showed low confidence throughout the sector for future projects.

A recent publication of the UK Markit/CIPS Purchasing Managers' Index (PMI) for the industry showed the lowest rate of positivity for business outlook in the coming years since 2009. The findings revealed that figures have fallen to 49.3 in November compared to 50.9 in the previous month causing concern for many officials within the construction industry. It means that the UK is back in contraction as any figure below 50 on the PMI scale represents a significant drop in confidence which will prove challenging for the industry in future projects.

The fall back into contraction has been blamed on the lack of new business coming in to replace the developments that had reached their conclusion and the next 12 months does not hold any positivity for officials within the construction sector. The weakest degree of positive sentiment has not been seen within the industry since December 2008 where levels hit a near-record low.

David Noble, CIPS chief executive, said: "Parallels to darker days of the economic crisis can be seen in the construction sector, which is under pressure from all sides. Businesses are now set for a bitter end to 2012, with little hope of respite in the new year.

"Jobs have been slashed in response to the fastest fall in new orders for over three-and-a-half years confirming the sector's return to contraction and the lowest level of confidence seen since the height of the economic crisis in 2008."

KPMG has also noted its concerns about the latest figures with Richard Lyle, director in the advisory firm's infrastructure practice, explaining that the significant lack of new orders has been deeply worrying. He also noted that there has not been the type of funding required to help develop larger projects therefore it has led to the industry stagnating. It has meant that businesses need to be fully prepared about how they conduct further operations in the future.

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Date: 05/12/2012 16:44:53

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