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Construction firms optimistic despite January slowdown

Markit/CIPS UK construction PMI survey dropped to 51.4 in January from 53.2 in December, below forecasts and the weakest for four months – but companies are upbeat about the economy

Britain’s builders started the year optimistic that business will soon pick up despite a slowdown in overall growth for the construction sector.

As housing and civil engineering companies reported falling business in January, the construction sector only just managed to keep growing, according to a survey.

The headline activity reading dropped to 51.4 from 53.2 in December in the Markit/CIPS UK construction PMI survey.

That was above the 50-mark that separates growth from contraction for the 13th straight month. But it undershot economists’ forecasts for 52.6 and was the weakest for four months.

Survey compilers Markit said the slowdown in growth was led by weaker new order growth, with companies reporting reductions in clients’ budgets.

Still, construction companies were generally more optimistic about activity picking up in the year ahead.

The survey’s confidence reading was the highest since May 2011 as companies cited help from improving economic conditions and new marketing initiatives.

“This suggests that growth may pick up again in the sector in coming months and, on top of the surprisingly strong start to 2012 reported by the sister survey of manufacturing, will raise hopes that a slide back into recession may yet be avoided,” said Sarah Bingham, economist at Markit.

The manufacturing sector enjoyed its strongest production growth for almost a year in January, according to the PMI survey for the sector published earlier this week. That gave a boost to government and business hopes that recession can still be averted despite a slight downturn in overall growth at the end of 2011.

But fears remain that unemployment has much further to rise as many businesses hold off hiring new workers amid many uncertainties.

In construction, the only sub-sector to post growth last month was commercial construction and Markit said that was not enough to create jobs in the wider sector. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds