Relief as construction sector shows growth

Economic indicators lately have been overwhelmingly bad, so there was some relief today at the latest figures from the construction industry.

It returned to growth in the second quarter of this year - just - following contractions in the first three months of 2011 and the last three months of 2010.

Construction output grew 0.5% quarter on quarter, not enough to rebound from the 3.4% slump in the first quarter, economists note.

The construction purchasing managers index edged back to 53.5 in July from 53.6 in June - any number above 50 indicates growth.

Howard Archer at IHS Global Insight said: "Following a recent flurry of disappointing surveys and data, it is actually something of a relief to see construction activity expand at a similar pace in July to June.

"However, the construction sector is hardly storming ahead and it clearly faces a challenging environment over the coming months which is likely to limit growth prospects."

Employment in the sector - that's for everyone from blokes in hard hats to besuited lawyers - contracted for a second month running in July after briefly growing in May.

Paul Connolly at project and construction consultancy Turner & Townsend said: "These data paint a picture of weak, fragile growth in the construction industry that mirrors the economy as a whole. Confidence has improved slightly, but the construction industry is still beset by volatility."

David Noble, at the Chartered Institute of Purchasing & Supply, said: "The sustained growth, albeit at a historically mild pace, has to be seen as a positive, especially compared to the fallback in the manufacturing sector."