The Markit/CIPS Construction Purchasing Managers’ Index shows that sector activity slowed slightly in August, with the index easing to 52.1 from 54.1 in July. New orders growth weakened for a third consecutive month. The residential construction sector slowed sharpest in August, while commercial sector growth eased marginally. Civil engineering was the only sector that saw stronger growth. Confidence improved modestly in August, but concerns over public sector spending cuts remained. Input prices continued to rise during August, mainly driven by raw material price increases.
Construction new orders
Construction new orders totalled £12.36bn in the second quarter of 2010, down 14% on the preceding quarter and 9% lower compared to last year. Within this, public new housing orders fell 23% on the quarter, but remained up 12%on last year. Private housing new orders were 24% down on the quarter, but 7% higher year-on year. Industrial new orders were up 26% on the previous quarter, but remained down 13% compared to a year ago.
Commercial orders were 7% down on Q1 2010, but up 4% year-on-year. Within the sector, offices related work totalled £871m in Q2 2010, up 10% on the previous three months and 25% higher compared to last year. Retail new orders totalled £735m, down 6% on Q1 2010 and 13% lower compared to a year ago. The flow of PFI education and health related projects also fell during Q2, down 30% and 63% on a year ago. Infrastructure orders declined 22% both on the preceding quarter and a year ago. Within this, roads and rail related work fell sharply, down 4% and 46% respectively compared to a year ago. Water and sewerage related new orders totalled £760m, up 18% quarter-on-quarter, but a fifth lower compared to last year. The value of electricity related contracts jumped to £817m, compared to £232m in the preceding quarter.
New orders for public non-residential work fell 13% in Q2 compared to the preceding three months and down 17% year-on-year. Orders for schools and colleges declined by 5% during the quarter and down 33% compared to a year ago. In contrast, university related orders, at £533m, were up 30% compared to the preceding three months and doubled year-on-year. The flow of traditionally financed health projects dropped in Q2 2010 to £535m, down by 50% on the previous quarter and 8% down on last year.
Construction material prices rose 0.8% in July and up 10% on a year ago. This is the strongest annual increase since February 2007. Material costs rose sharpest for non-residential work, up 10.8% year-on-year. Fabricated structural steel prices jumped 5% during the month and up 29% compared to a
year ago. Concrete reinforcing bars were unchanged in July, but up 26% year-on-year. Pre-cast concrete prices were down 1% in July, but unchanged compared to last year. Cement prices were flat in July, but down 2% year-on year. Sawn wood prices were up 2% during the month and rose 13 % on last year.