Construction slide plumbs new depths

Britain's construction sector shrank last month at its fastest pace since records taken from purchasing managers began more than a decade ago, as falling property prices and a shortage of credit took their toll.

The Chartered Institute of Purchasing and Supply construction index fell to 31.8 from 35.1 in October. That was the ninth consecutive month the index has been below 50, the level which marks contraction, and the lowest since the series began in 1997.

"The unyielding global economic challenges continued to depress UK construction in November, reflected by the index falling to its lowest-ever reading," said Roy Ayliffe, director at CIPS.

"Purchasing managers reported significant falls in new orders, industry output and employment, providing yet further evidence of the deterioration in the sector."

The survey also revealed an end to input price inflation as raw material costs fell.

The Bank of England is expected to cut rates by a further percentage point this week, having slashed them by a cumulative two percentage points since October to 3 percent, their lowest level since the 1950s.

Another cut in interest rates should provide some relief to the construction sector which has struggled since the credit crunch pushed up borrowing costs for both firms and individuals.

But it may take a while for any positive impact to be felt as banks remain reluctant to lend.