UK construction sector shrinks for third month running

UK construction sector shrinks for third month running
Unusually cold weather combined with sluggish underlying demand kept a lid on construction work in March. Photograph: Christopher Furlong/Getty Images

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British construction output contracted in March for the third month in a row, according to a survey, suggesting the sector will have weighed on economic growth in the first quarter.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) inched up to 47.2 from 46.8 in February, holding below the 50 level that separates expansion from contraction and slightly undershooting forecasts for 47.5.

Markit, which compiles the survey, said unusually cold weather combined with sluggish underlying demand kept a lid on construction work in March.

“The negative print for construction output mirrors that seen for manufacturing, and now leaves the service sector as the last great hope for avoiding another slide in UK GDP,” said Tim Moore, senior economist at Markit.

A PMI survey for the service sector in March is due out on Thursday, giving a clearer sign of whether Britain’s economy avoided its third recession in less than five years, having already contracted in late 2012.

Despite the weak headline number, the construction sector showed some signs of resilience last month, according to Wednesday’s survey.

The decline in new orders was the least sharp since October, while house building grew at the fastest rate since May 2012.

The promising trend in residential work helped lift optimism among firms to its highest level in almost a year, as they forecast a rise in output over the coming 12 months.

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