Britain's construction companies have grown more optimistic about their business prospects for this year despite a slower expansion in activity in January, a survey showed on Thursday, adding to hopes that the economy may avoid recession.
The headline Markit/CIPS construction Purchasing Managers'Index fell to 51.4 from 53.2 in December as growth in new orders slowed and some existing contracts were completed.
That was below analysts' forecasts for a drop to 52.6 and the weakest rate of expansion in four months.
However, the component measuring firms' confidence about business over the next year rose to an eight-month high, helped by what they said were improving economic conditions.
This suggests that growth may pick up again in the sector in coming months and, on top of the surprisingly strong start to2012 reported by the sister survey of manufacturing, will raise hopes that a slide back into recession may yet be avoided, said Sarah Bingham, economist at data compiler Markit.
The PMI survey of manufacturing on Wednesday showed that the sector unexpectedly returned to growth last month.
Britain's economy contracted in the final quarter of 2011,as manufacturers and construction companies scaled back production. If followed by another consecutive quarter of contraction, that would amount to a recession.
Growth in the construction sector, which accounts for some 8 percent of the total economy, was driven by commercial building in January, with activity in house building and civil engineering shrinking slightly, Bingham said.
The resulting overall increase in output was not enough to sustain job creation, and employment in the construction sector stagnated, she added.
Input costs rose markedly in January on the back of higher raw material and energy prices, although the rate of inflation eased.
(Reporting by Olesya Dmitracova)