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U.K. Construction Output Unexpectedly Contracts as Orders Plunge

Dec. 4 (Bloomberg) -- A U.K. construction index unexpectedly showed contraction in November as orders declined at the fastest pace for more than 3 1/2 years and confidence dropped to its lowest level since 2008, Markit Economics said.

An index of activity decreased to 49.3, the lowest reading since August, from 50.9 in October, Markit and the Chartered Institute of Purchasing and Supply in London said in a statement today. The median estimate of nine economists in a Bloomberg News survey was 50.5. A reading above 50 indicates expansion.

The U.K. economy is struggling to shake off a double-dip recession with the Bank of England forecasting a “zig-zag” pattern for gross domestic product and predicting a possible contraction this quarter. Lower levels of construction in November were driven by “solid reductions” in house building and commercial activity, with the latter declining at the fastest pace since December 2009, the report showed.

“Parallels to darker days of the economic crisis can be seen in the construction sector, which is under pressure from all sides,” CIPS Chief Executive Officer David Noble said in the report. This confirms “the sector’s return to contraction and the lowest levels of confidence seen since the height of the economic crisis in 2008.”

In the building industry, data pointed to the weakest positive sentiment since the near-record low seen in December 2008, Markit said. As a result, jobs were cut in November at the fastest pace for almost two years, it said.

A Markit report yesterday showed that U.K. manufacturing shrank less than economists forecast last month as business conditions stabilized. The research group will probably say in a report tomorrow that services growth accelerated in November, according to the median estimate of an economist survey.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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