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UK residential activity expansion slows

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World Cement,

Although UK construction companies have indicated a sustained upturn in overall business activity throughout March, the pace of expansion remained relatively subdued in comparison to the trends seen for much of the past three years. This reflected a further moderation in new business growth, with the latest increase the weakest since April 2015.

Additionally job creation also softened across the construction sector in March and sub-contractor usage dropped for the second month running. At 54.2 in March, the seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI® ) posted above the neutral 50.0 value for the thirty-fifth month running. However, the latest reading was unchanged since February and indicated the joint-slowest rate of output growth since June 2013.

Sub-sector data highlighted that faster rises in commercial work and civil engineering activity were offset by another slowdown in residential building. The latest increase in housing activity was only marginal and the weakest recorded since January 2013. Slower growth of incoming new work continued to act as a brake on construction output in March. Reports from survey respondents cited a generally supportive economic backdrop, but some noted that greater uncertainty about the business outlook had resulted in more cautious spending patterns among clients. Reflecting this, latest data signalled the weakest rise in new work received across the construction sector since the pre-election slowdown in April 2015.

March data highlighted greater caution among construction companies in terms of their staff hiring, with the rate of employment growth easing to its slowest since June 2013. At the same time, subcontractor usage decreased at a slightly steeper pace than in February, which contributed to the least marked rise in sub-contractor charges for just over two-and-a-half years.

A softer upturn in overall workloads across the construction sector led to another slowdown in input buying growth. The latest increase in purchasing activity was the weakest since April 2015. Suppliers’ delivery times lengthened again in March, but input cost inflation moderated for the second month running to its weakest since February 2010.

Looking ahead, the majority of survey respondents (51%) expect a rise in business activity at their units over the next 12 months, while only 11% forecast a reduction. While this signalled that UK construction Page 2 of 3 © Markit companies remain optimistic about their prospects for growth, the overall degree of confidence was the joint-lowest since December 2014.

Adapted from press release by

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