Construction firms in the UK have recovered slightly from a slump in September, but a lift from residential building was not enough to boost sentiment in the sector.
The shift from contraction back to a small margin of growth was entirely driven by housebuilding, as commercial projects and infrastructure continued to slow in October.
Activity returned to positive territory with the purchasing managers' index (PMI) score shifting to 50.8, up from 48.1 in September. Anything above 50 on the index indicates growth.
But confidence in the sector hit its lowest level since December 2012 - a 58-month low - as civil engineering companies recorded the worst performance of any group. Firms claimed that there was no flow of new contracts to replace their completed projects.
Tim Moore of IHS Markit, which produces the PMI scores, said that while a rise in house building had offered a "bright spot" it was a difficult month for the construction sector. Commercial activity and civil engineers were seeing "sustained declines", he added.
The sector is far from out of the woods, according to Samuel Tombs of Pantheon Economics. The PMI score was consistent with a fall in output of 0.5pc quarter-on-quarter in the last three months of the year, he said.
This would follow the trend of declining output in the second and third quarters of the year. Mr Tombs also warned that low confidence in the sector suggested that a more intense slowdown might be on its way.
Duncan Brock, of the Chartered Institute of Procurement and Supply, said that the sector needed to rebalanced away from housebuilding, and called for action on skills from the Chancellor Philip Hammond in his November Budget.
Construction output recovered very slightly last month.
"Any heavy reliance on residential building alone would be foolhardy with interest rate rises on the horizon and availability of skilled workers lacking in the sector, unless the Chancellor pulls a rabbit out of the hat and supports the training of new construction workers," Mr Brock said.
He added that strong growth in the eurozone would have put pressure on UK building supply chains.
Mike Chappell, of Lloyds Bank Commercial Banking, said that contractors were operating on the basis that there would be no construction-friendly giveaways in the Chancellor’s statement.
Source: The Telegraph
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