Orders Up but UK Construction Sector Hanging
Richard Lyle, director in KPMG’s infrastructure, building and construction practice, comments on the Markit/CIPS construction Purchasing Managers’ Index which rose to 56.7 from February’s 54.3.
“Clearly today’s construction PMI figures are good news for the construction sector – the confidence shown in these figures is very encouraging for the industry but margins are still under pressure.
“Despite this uptick, major construction firms still have a cautious outlook for 2012. Although order books are holding up on the whole, contractors still have gaps in their 2012 scheduled work. Businesses, especially in the supply chain will need to manage cash very carefully to ensure they have the working capital to meet the challenges of 2012.
“However, positive signs can be seen in the new house markets in London and the South East which are still buoyant. Furthermore, a growing commercial market in these areas is beginning to pick up the slack from the public sector. The Prime Minister’s recent speech on infrastructure spend is a positive message to the industry, particularly for economic infrastructure, although social infrastructure development seems to have less of a focus.
“The industry is still relatively stressed after the recent hard years and 2012 is still looking difficult for the sector. The hope is that this positive trend will continue and confidence will grow for 2013.”