-Output declines during August amid marked fall in new work
-Commercial activity drops for first time in two and-a-half years
-Construction companies least optimistic about business outlook since October 2011

The Markit/CIPS construction sector index fell to 49 points in August, from 50.9 during the month before, its second-lowest since February 2010.

The consensus forecast was for a reading of 50.

Residential building activity was the worst performing category of construction output monitored by the survey in August, although activity levels also contracted in civil engineering and even in the commercial construction space.

Significantly, the fall in new business volumes was the fastest since April 2009, with construction firms citing lower spending patterns among both public and private sector clients in August.

Employment levels are said to have stagnated in August, as UK construction companies indicated that their business confidence weakened for the fourth time in the past five months during August.

Meanwhile, the latest data signaled a robust and accelerated pace of input price inflation in the construction sector, with the latest rise in cost burdens the fastest since March even as delay at suppliers mounted.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said:

"August data reaffirms that UK construction firms are suffering a prolonged downturn in new work and there is little evidence to suggest an imminent rebound in output levels.

"(...) Therefore, an important issue is simply whether a floor has yet been established, and the survey evidence at this stage seems to suggest it hasn't.

"Indeed, output dropped in August at the second fastest rate since the snow-affected month of February 2010, with commercial activity even joining the housing and civil engineering sectors in contraction for the first time in two-and-a half years."

AB

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