May’s Markit/CIPS UK Construction PMI® suggests continued growth although the pace of this seems to have slowed somewhat, with the index figure dropping from 60.8 in April 2014 to 60 in May 2014. This represents the slowest rate of growth since October last year. This fall in moment has been attributed to more moderate commercial building activity. Civil engineering output growth was higher than it was in April, and although residential building growth slowed to a three-month low, it was still the strongest performing sector in May. Other highlights from the report include staffing levels, which increased for the twelfth month in a row. Higher input buying also improved, suggesting a continued rise in demand for construction materials.
"Output growth hit a seven-month low in May, but the UK construction sector is enjoying its strongest overall phase of expansion since the summer of 2007. Residential building remains a key engine of growth, with survey respondents citing another surge in new house building starts during May," said Tim Moore, Senior Economist at Markit. "The latest survey highlights that the construction sector is now experiencing its longest period of job creation for six years. Strengthening demand for construction staff arrived amidst the fastest drop in sub-contractor availability since August 1997, which in turn contributed to a survey-record rise in sub-contractor charges in May."
"UK construction output is still around 10% lower than its pre-crisis peak, but there were further indications of capacity strains in May as companies reported sharply lengthening delivery times for raw materials as well as the steepest drop in the availability of sub-contractors for almost 17 years."
The seasonally adjusted Markit/CIPS PMI® for UK manufacturing fell slightly from 57.3 in April to 57 in May. However, this is the fifteenth consecutive month that manufacturing increased and the fourteenth successive month that new export orders improved. Manufacturing employment grew for the thirteenth month in a row.
Adapted from Markit/CIPS reports by Louise Fordham
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