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Credit crunch leads to major downturn in construction
Page 46
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By Louise Cote THE CONSTRUCTION industry has seen its strongest contraction since 1997. Industry activity as a whole is suppressed. and the three sub-sectors of housingcommercial and civil engineering have all declined.
According to the July report from the Chartered Institute of Purchasing and Supply (CIPS) and Markit, which gives a single index figure as a measure of sector health, industry activity fell from 419 in May to 38.8 in June.
Any figure lower than 50 indicates contraction. Of the three sub-sectors, housing suffered the sharpest decline. The report also suggests that new business has slowed and firms are reporting higher degreess of unsuccessful tenders, redundancies and resignations. The falling employment rate in construction follows 23 months of growth. Lower purchasing of supplies has also been noted, with some companies opting for sameday delivery of materials to allow for greater flexibility.
However, while the future activity index for June was lower than usual at 57.8, many of the companies surveyed suggested that growth would pick up again after the credit crunch.
They anticipate a return to large contracts and company expansion within a year.
The CIPS Report on Construction will be published on 4 August and costs £750 per year, or for CIPS members one year of monthly reports costs £450.
Call Markit on 01491 418700.