By Daniel Hunter

December data signalled a deepening downturn in output across the UK construction sector, alongside a sharp and accelerated reduction in incoming new work.

Adjusted for seasonal factors, the Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) - which measures overall output in the sector -
dropped from 49.3 in November to 48.7 during December.

The index has now posted below the neutral 50.0 value in four of the past five months, and the latest reading indicated the fastest rate of contraction since June 2012 (when output was constrained by unusually bad weather and an extra bank holiday).

Although some survey respondents suggested that bad weather in December had resulted in unusually long seasonal shut downs at their units, the majority of companies cited weak underlying demand at the end of 2012.

Housing activity was by far the weakest performer of the three broad construction sub-categories monitored by the survey in December. The decline in residential construction output was the seventh in as many months and the steepest since December 2010. Commercial activity also decreased at a solid clip in December, extending the current period of reduction to five months, while civil engineering bucked the overall trend by posting another moderate expansion.

“December rounded off a miserable year for the UK construction sector, with output declining at the steepest pace for six months and new business intakes falling back at the fastest rate since April 2009," Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said.

"While some firms cited the unusually wet weather as leading to longer than expected seasonal breaks at the end of 2012, weak underlying demand remains prevalent throughout the sector. Survey respondents are also relatively subdued about the 2013 outlook amid reports from their clients that budgets will be under even greater pressure over the year ahead.

“A sharp and accelerated downturn in housing activity was the most striking feature among the overall weakness shown by December’s PMI survey. The pace of contraction in residential building was the strongest since the snow-related drop two years previously, and the extent of the decline made December 2012 one of the worst months for housing activity since the spring of 2009.”

Join us on
Follow @freshbusiness