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UK: growth in construction output slows

World Cement,

The Markit/CIPS UK Construction Purchasing Mangers’ Index® (PMI®) for December 2014 has been released. Some highlights from the report are provided below.

  • Although the UK construction sector continued to strengthen, the pace of growth slowed.
  • The PMI® came in at 57.6 in December, down from November’s 59.4. This is the lowest increase in 17 months but still higher than the long-run series average of 54.5 and far above the 50.0 cut-off mark that signals contraction.
  • Of the three sub-categories, the biggest increases were seen in residential construction. Commercial construction activity also improved, but at a slower rate than in November. Civil engineering declined following 17 months of growth.
  • Recruitment levels were up in December. Although the rate of job creation did not quite match November, it remained above the historical average.
  • Several companies taking part in the survey noted that the skills shortage in the construction industry was intensifying.
  • Of those that participated in the survey, 52% expected an increase in business activity in 2015, while 13% anticipated a decrease.

“The sector continues on its levelling path this month, with procurement and supply management professionals reporting continued strong growth but with a weaker trajectory than that seen in recent months,” said David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement and Supply. “The sector is still expanding with the index posting at a higher level than the longer-term average, and led primarily by residential development - but it has become a victim of its own success as it struggles to keep up with its own speed of recovery. With increases in new business, comes pressures on the availability of talented staff and a squeeze on the performance of supply chains.”

“Still replacing the skills lost in the recession and faced with increasing charges for the sub-contractors used to fill in the shortfall, the sector is enjoying lower commodity prices to balance out costs. As more new business comes in, so vendor performance is being affected and key raw material delivery times are lengthening,” added David Noble. “Levels of positive outlook remain high with 52% of respondents expecting a rise in business activity in 2015, though this month’s sudden drop in the strength of the civil engineering sub-sector and this year’s General Election is adding a note of caution.”

Adapted from press release by

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