You’d be forgiven for thinking that the latest (PMI) would provide a better read than June’s figures. After seeing the rate of contraction ease consecutively for four months, the PMI took a turn for the worse fuelling speculation of a ‘w-shaped’ recession.

Coming in with a reading of 44.5, the Purchasing Managers Index was down slightly from as the UK construction sector goes into its sixteenth month of decline.

Although all three sub-sectors recorded a fall in activity in June, housing and commercial faired the worst – unlike civil engineering which is still buoyed-up by the Government’s economic stimulus package. Though gloomy, the sector’s current rate of decline is quite removed from that seen at the turn of the year when construction is said to have ‘bottomed-out’.

Overall, it seems the latest plunge is largely due to clients placing fewer orders as they tighten their budgets on the back of an increasingly uncertain economic landscape. What’s more, with an evident gap in the number of new contracts on the horizon, many firms have been forced to consolidate their position in preparation for further turbulent times.

Purchasing managers working at the heart of UK construction businesses said added pressure drove up competition between contractors as they were forced to slash prices again and almost 31 per cent were forced to cut jobs at an accelerated pace.

And it doesn’t stop there. Compared to the UK’s other leading sectors - manufacturing and services - construction continues to take the brunt of the global economic downturn and, as reaffirmed by the latest PMI results, is likely to recover at the slowest pace.

Nonetheless, all sectors are suffering from the onslaught of dampened demand with firms of all shapes and sizes discounting their services and products. More so, there seems to be no end in sight to the number of job cuts being made as firms try and keep their margins under control.

Although the road to recovery may be prolonged and slow, there is some good news as purchasing managers are more optimistic about the future performance of the UK construction economy. This can give us hope that whilst times are difficult now, we may see a different picture emerging next year.

Chief executive at the Chartered Institute of Purchasing & Supply

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