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Slowdown in UK construction in July

World Cement,

The Markit/CIPS UK Construction PMI for July shows a slight slowdown in the UK construction industry compared with the previous month at 57.1 from 58.1.

Residential building remained the best performing area of construction, but saw a loss of momentum since June, with the latest upturn in housing activity the second slowest since June 2013. Civil engineering also slowed, while commercial projects increased activity at the fastest rate since March.

The pace of job creation in construction companies remained strong, while skills shortages contributed to a reduction in sub-contractor availability and an increase in sub-contractor charges.

The Markit/CIPS report also points to signs that some supply chain pressures have started to subside, though strong demand for construction materials and low stocks at suppliers continued to drive up input prices.

Commenting on the figures, Tim Moore, Senior Economist at Markit, said: “July’s growth slowdown is the first for three months and perhaps a sign that the post-election impact on construction confidence has started to diminish. Reflecting this, UK construction firms’ business activity expectations moderated from June’s 11-year peak but remain strong overall.”

“Survey respondents commented on a variety of growth constraints afflicting the residential building sector, including long lead-in times for new projects, scarce supplier capacity, skill shortages and stretched sub-contractor availability. Added to this, building costs rose at an accelerated pace in July and sub-contractor charges increased at one of the fastest rates since the survey began in 1997,” he added.

David Noble, Group CEO at the Chartered Institute of Procurement and Supply, commented: “Overall, the sector’s optimism was still strong, as staffing levels remained high in anticipation of future success, though issues around sourcing skilled individuals remained a thorn in the side of the sector.”

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