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December Construction PMI Reading
48.7, down from 49.3 in November.
- Sharpest drop in construction output since June 2012.
- Housing activity down at fastest pace for two years.
- Total new business falls at accelerated pace in December.
Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI said:
"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.
"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."
Yet more bad news for the construction sector, which has been in free-fall since the end of 2011 when the industry's collapsing output dragged the economy down into a double dip recession.
This is a worse than expected reading for December and compounds the view that the final quarter of 2012 will show an overall GDP contraction.
The question now is if sustained poor performance in construction and other areas of the economy will drag the country down into a triple-dip recession, or if, as most economists predict, it will return to marginal growth in the first quarter of the new year.
Some hope for the construction sector can be found in the Treasury's £40bn scheme to guarantee the finances of nationally significant projects, which may yet stimulate building activity and help the industry towards recovery from its period of malaise.
Purchasing managers index (PMI) surveys are carried out by Markit Economics and the Chartered Institute for Purchase & Supply (CIPS).
Each month purchasing managers across private UK firms are surveyed to give an indication of business activity in the service, manufacturing and construction sectors.
On the index, neutral output activity is 50.
Any reading above represents expansion, while under signifies contraction.