New house building in UK slows down

Activity in the British housebuilding industry fell for the first time in five months after firms were frustrated in breaking ground on new projects, a survey showed today.

Fewer orders and delays in starting housebuilding work on site were behind the contraction last month, the Chartered Institute of Purchasing and Supply (CIPS) said.

The CIPS Housing Activity Index recorded a level of 48.9 in October against 50.2 in the previous month, with any figure above 50 indicating growth. The last time the index was below 50 was in May, when it stood at 49.9.

It comes against a backdrop of rising raw material costs, with oil prices staying strong last month after hitting a new high above US$70 a barrel over summer.

Sky-high prices for steel were also giving construction firms a headache, with input price inflation hitting an eight-month high in October.

In addition to the drop in activity in housing, civil engineers were under pressure as their sub-sector contracted to 47.5 last month from 50.6 in September.

These declines were reflected in the headline Purchasing Managers’ Index (PMI) - which measures total construction activity – slowing down from 57.2 in September to 53.9 last month.

Roy Ayliffe, director of professional practice at CIPS, said only commercial construction was continuing to show any growth as firms slowed their rate of recruiting new staff.

But he added: “Construction firms remained bright about the future as many cited investment in capacity expansion programmes, demand for construction projects and improved marketing as causes for optimism.”

This was visible in the upbeat responses of more than 60% of companies which expect higher activity in a year’s time.