Markit/CIPS indicates slowed growth in UK construction sector

According to Markit/CIPS, in November, growth in the UK construction sector slowed, with output, new business and employment all rising at slower rates than in the previous month. This signals the slowest expansion of business activity for seven months. Aside from the pre-election slowdown seen in April, overall output growth was the weakest since mid-2013.

All three broad areas of the construction industry experienced this slowdown. Residential building activity increased at the weakest pace since June 2013; civil engineering activity increased at the slowest rate for six-months and was the worst performing category; and commercial construction activity, while topping the growth table, was less marked than in October.

Construction companies mainly commented on supportive economic conditions and rising workloads at their units. However, some reports from survey respondents indicated a lack of new work to replace completed projects in November, which acted as a drag on business activity growth. Reflecting this, the latest data indicates a weaker rise overall in new business volumes. Some construction firms also suggested that more cautious spending patterns among clients had weighed on new order inflows. These slower growth patterns across the sector contributed to a moderation in job creation from the 11-month high recorded during October. Although still strong in a historical context, the latest rise in staffing levels was the weakest since September 2013.

In line with the trends for output and new work, latest data highlighted a slowdown in input buying growth across the construction sector, with supplier performance continuing to deteriorate, probably due to shortages and pressure on capacity.

Construction firms noted that lower prices for some raw materials, particularly metals, had partially offset rising labour costs.

Adapted from press release by Rebecca Bowden   Source: Markit/CIPS

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