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Growth in UK construction activity slowed in July to the weakest in four months, however fears of an immediate double dip seem unlikely.

New figures from Chartered Institute of Purchasing and Supply (CIPS) revealed that UK construction activity continued to increase during July but at a slower rate suggesting that the rate of expansion in the sector may have already peaked. Data for July signalled a strengthening of the UK market, which was supported by a further increase in new orders.

Sarah Ledger, economist at Markit and author of the report behind the figures said, 鈥淕rowth of the UK construction sector slowed during July. However, this was not wholly unexpected, and likely represented a normalisation from the strong rates of expansion recorded in the second quarter鈥�.

However, she went on to warn that more concerning was the continued impact on confidence that impending public sector spending cuts and the scheduled VAT rise have had. 鈥淭his was highlighted by the solid reduction in employment indicated during the month, as construction companies continue to review costs carefully.鈥� 

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said, 鈥淎lthough we鈥檝e seen a marked slowdown in growth for the UK construction sector, the warning bells aren鈥檛 ringing yet and an immediate double-dip seems unlikely.鈥�

鈥淚nstead, we鈥檙e finally starting to see the growth in activity tail-off and normalise at a slightly slower rate.

鈥淣onetheless, despite rises in new orders and output, it鈥檚 telling that contractors accommodated the slowdown by making immediate job cuts - reaffirming how tight things still are. In the face of ongoing public sector spending cuts and steep input price inflation, it鈥檚 really going to be a case of slow and steady wins the race.鈥�

鈥淭he industry has to come to terms with a much altered, post-recession landscape, where full recovery may take some time yet.鈥�