Britain’s construction companies are more optimistic about their prospects than they have been for eight months, according to a survey of the sector, in spite of slowing output growth, employment and new orders in January.

The Markit purchasing managers index for the construction sector fell to 51.4 in January from 53.3 in December. Any number above 50 indicates output is expanding rather than contracting. However, the sub-index for business expectations surged from 57.6 to 66.2 amid optimism about improving economic conditions and new marketing initiatives.

Sarah Bingham, an economist at Markit, said: “This suggests that growth may pick up again in the sector in coming moths and, on top of the surprisingly strong start to 2012 reported by the sister survey of manufacturing, will raise hopes that a slide back into recession may yet be avoided.”

The British economy contracted slightly in the fourth quarter of last year and economists are divided as to whether it will contract again this quarter, which would land the country in another technical recession.

The economic data released so far this year have been tentatively positive. On Wednesday, the PMI survey for the manufacturing sector surprised economists by suggesting output and new orders picked up strongly in January. Manufacturing accounts for about 10 per cent of gross domestic product and construction accounts for about 7.5 per cent. Because Britain’s huge service sector accounts for most of the rest, economists are waiting for Friday’s services sector index with great interest.

The construction sector survey painted a mixed picture. Output continued to expand on commercial projects, but shrank slightly on housing and civil engineering projects. Employment levels also stagnated after expanding in December. The sub-index for new orders slipped from 55.1 to 53.9 in December, suggesting new orders are still growing but at a slower pace. Respondents to the survey commented that reductions in clients’ budgets had led to the slower rise in new business.

The sub-index for input prices fell from 64.6 to 59.5 the month before. This suggests that, while input prices are still rising, they are doing so at their slowest rate since March 2010.

However, the PMI surveys have been more positive about the output of the construction sector recently than the lagging official data, prompting some caution from economists over how much they should read into them.

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