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UK construction output: pace of growth slows in October 2014

World Cement,

The Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) for October was 61.4, down from September’s 64.2. The decline has been attributed to a slower pace of expansion – the lowest since May 2014. However, it should be noted that overall construction output increased in the UK and that the index remained above the neutral mark of 50.0.

Highlights from the report

  • October marked the eighteenth consecutive month of growth, although the rate of growth slowed.
  • Higher activity was registered across the three main areas of the construction sector, although each of these also experienced a weaker growth rate.
  • Commercial activity was the strongest performer of the three categories and civil engineering was the weakest. The former registered its slowest pace of growth in five months while the latter’s rate of growth remained above its long-run average.
  • Housing activity in October was weaker than in September and growth was the lowest it has been for 12 months. Less favourable housing market conditions, and therefore a greater sense of caution among clients, has been named as a contributing factor.
  • Staffing levels increased but the pace of job creation was slower and at its lowest for six months.
  • 55% of the survey panel expects output to rise over the next 12 months, with just 9% anticipating a fall in output.

“October’s survey provides the first indication that the chill winds blowing across the UK housing market have started to weigh on the booming residential building sector,” commented Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI®. “House building activity still increased at a strong pace overall, but the sharp growth slowdown since this summer reflects greater caution towards new development projects amid tighter mortgage lending conditions and renewed uncertainties about the demand outlook. Despite signs that the house building recovery has lost some intensity, UK construction companies remain highly upbeat about their overall prospects for growth. Survey respondents cited a broad-based improvement in domestic economic conditions and rising investment spending patterns as key factors likely to support construction output over the year ahead.”

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement and Supply, added: “Though it appears that the euphoria of the last few months is now settling down to a slightly more modest level of expansion, delivery times continue to lengthen and suppliers of raw materials are in high demand, making the completion of construction projects more challenging and showing how the number of available suppliers has not yet reached pre-recession levels.”

Adapted from press release by

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