Business

Construction industry 'sees growth but rising costs'

London Olympic Stadium under construction
Image caption Building firms said they remained busy, but the pipeline of new orders was looking a little thinner

The UK building industry continued to grow in March, but raw materials price rises hit a 31-month high, research suggests.

Rising costs were driven by fuel, oil and steel, the Purchasing Managers Index (PMI) for the sector said.

Industry activity registered a level of 56.4 for March, well above the expected 54.9. A level above 50 indicates expansion.

However, the survey also suggested that new order growth had slowed.

'Still wary'

"Worryingly, new order growth slowed more notably than that of activity in March, pointing to a slowdown in activity over the coming months, especially if the pattern is sustained," said Sarah Ledger, economist at Markit Economics and author of the report.

Anecdotal evidence also suggested industry members remain concerned about the likely impact of government spending cuts on future business.

"Confidence among constructors remained subdued, slipping to a three-month low, with many companies still wary about the possible impacts from public spending cuts," added Ms Ledger.

Despite this, the employment in the cyclical industry appears to have bottomed out.

The survey found the rate of reduction of staffing levels had fallen to its slowest rate since job cuts in the sector began nine months ago.

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