The rate of construction growth slowed for the third month in succession during August, according to the latest CIPS/Markit Construction PMI report.
The Construction Purchasing Managers’ Index posted a score of 52.1, compared to July’s reading of 54.1. A figure above 50 indicates growth, anything under 50 means contraction.
All of the three UK construction sub-sectors reported a rise in activity in August. However, in the residential construction sector there was a marked slowdown in the rise in activity. Commercial-based construction activity growth also eased during the month, although only marginally. Civil engineering was the only construction category to indicate an increased rate of expansion during August.
New business won by construction firms increased for a sixth successive month during August, but the rate of growth fell for a third successive month.
Employment in construction decreased during August for a second successive month, despite sustained growth in new orders and activity. Usage of sub-contractors also reduced.
David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “Those who are looking for signs of a slowdown will find plenty to worry about in this month’s construction PMI. The most disturbing is the marked slowdown in the residential sector as this is where much of the recent sector growth has come from. The slight increase in public sector activity disguises continuing uncertainty about the scale of spending cuts which we have yet to experience. Employment levels falling for a second successive month will cause deep concern, not least for the ripple effects they may have on other sectors.
“For the more optimistic amongst us, however, it still looks like we are entering a period of low growth rather than another recession but the jury's still out. Though this month’s figures are disappointing, we should remember that overall the sector is still growing.
“The housing market is key to recovery in the longer term but now appears to be in a transition phase. There is still a job to be done in balancing stricter criteria for mortgage lending with demand for new homes, if new projects are to get off the ground and reverse the slump in the residential sub-sector.”
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