Builders' decline rate slows

THE economic recovery stepped up a gear yesterday as the battered construction industry recorded its slowest rate of decline in almost two years.

Although the sector has still not returned to growth, the latest Purchasing Managers' Index (PMI) showed a marked deceleration in the rate of contraction in January.

Howard Archer, chief UK and European economist at IHS Global Insight, said the results were particularly impressive given the poor weather conditions last month. The construction sector is one of the most vulnerable when Britain falls prey to a big freeze as it did during January.

The construction PMI, which is published by the Chartered Institute of Purchasing Supply and research group Markit, rose to 48.6 from 47.1 in December, with 50 marking the crucial boundary between contraction and growth.

Archer said: "While still indicating modest contraction, this is a substantial improvement from early 2009 when the index dipped below 30."

On Monday, the manufacturing PMI hit its highest level since October 1994.