Did you know that there is a version of The Construction Index for the USA? Visit the site No thanks
Follow us on Twitter Follow us on LinkedIn Follow us on Instagram
Daily construction news
Weekly plant news

Construction News

Mon December 18 2017

Related Information
Related Information
Related Information

News » UK » Construction PMI dips as house-building loses momentum » published 4 Apr 2017

Construction PMI dips as house-building loses momentum

Purchasing managers report a slowdown in growth across the UK construction sector, with the house-building boom starting to slow.

Civil engineering activity rebounded but house-building growth softened Above: Civil engineering activity rebounded but house-building growth softened

With new work increasing only marginally, construction employment growth is also slowing.

However, construction companies remain relatively upbeat about their near-term growth prospects, bouncing back from the post-referendum blues seen in mid-2016. In fact, optimism regarding year-ahead business activity picked up in March to its second-highest since December 2015.

The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) dropped just a little from 52.5 in February to 52.2 in March, signalling the joint-slowest upturn in overall construction output since the current period of expansion began in September 2016. Softer growth primarily reflected a loss of momentum in house-building activity, which offset a rebound in both commercial and civil engineering activity. The latest increase in work on civil engineering projects was the fastest so far in 2017 and the strongest of the three sub-categories monitored by the survey in March.

Subdued new business growth persisted in March, with the rate of expansion unchanged from the four-month low seen in February. Construction companies noted that squeezed client budgets had acted as a brake on new business growth. There were also reports citing planning delays and greater cost consciousness among clients.

At the same time, survey respondents noted that reduced Brexit-related anxiety and the resilient economic backdrop had a positive impact on new invitations to tender. This helped underpin an improvement in business confidence regarding the growth outlook.

Almost half of the survey panel expect a rise in business activity during the year ahead, against only 9% that forecast a decline.

Construction companies recorded a solid increase in employment numbers in March, although the pace of job creation eased to a three-month low. Meanwhile, subcontractor usage dipped slightly since February, but construction firms continued to report a sharp drop in the availability of subcontractors.

Input buying declined for only the second time since September 2016, which was mainly linked to subdued new business growth in March. Supplier performance nonetheless deteriorated at one of the fastest rates seen over the past two years, driven by low stocks among vendors.

Input cost inflation remained strong in March, linked to higher prices for imported materials and global commodity price rises. However, the overall rate of cost inflation eased further from the eight-and-half year peak seen in January.

Tim Moore, senior economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: “UK construction firms experienced a growth slowdown in March, with the loss of momentum centred on house-building. A weaker trend for residential work has been reported throughout 2017 so far, which provides an indication that the cooling UK housing market has started to act as a drag on the construction sector.

“Civil engineering projects were the construction sector’s main growth engine in March, driven by rising infrastructure spending and a strong pipeline of new work throughout the UK.

“March data showed a slight rebound in commercial construction activity. Survey respondents noted that the resilient economic backdrop and receding Brexit-related anxieties have helped to stabilise client demand after the disruption to development projects last summer.

“Despite a relatively subdued rise in new work during March, UK construction firms reported a more sanguine assessment of their year-ahead growth prospects. Business confidence was among the highest seen since the end of 2015, which construction companies linked to upcoming tender opportunities, plans for increased marketing expenditure and hopes of a sustained recovery in clients’ willingness to spend.”

Duncan Brock, director of customer relationships at the Chartered Institute of

Procurement & Supply, said: “Where the housing sector acted as the main engine of growth over the last four years, this month it was slower and stuttering, while overall purchasing activity in the construction sector was disappointingly tame, shackled by a lack of new orders and rising costs.

“This downbeat effect took a small bite out of any strong rises in employment levels, as the increase in staff hiring was at a three-month low. But as the sector showed strong optimism for future business, concerns over the skilled labour availability are likely to persist in coming months.

“Pressure on suppliers remained intense, as they battled against lower stocks and made greater efforts to fight the pincer movement of a shortage in some materials and the continued force of higher global commodity prices.”

MPU

Further Images

Download our free construction news iPhone / iPad app. Sign up to our FREE email newsletters or subscribe to our RSS feed for regular updates on the latest Construction News, Plant News, Contract News & Supplier News. The Construction Index also provides the latest Construction Tenders, Construction Market Data & Construction Law Commentary all FREE.

This article was published on 4 Apr 2017 (last updated on 4 Apr 2017).

More News Channels