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UK construction sector: growth rate of new work slows in April

World Cement,

The Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) fell from 57.8 in March 2015 to 54.2 in April 2015. Although this is above the 50.0 no-change value, it is the lowest index figure for two years and represents two consecutive months of decline.

Of the three sub-sectors, civil engineering experienced a decline in activity for the first time in four months, while commercial construction growth was the least marked since August 2013. Residential construction performed the best. However, the rate of growth in residential construction in April was the lowest in 22 months.

The pace of new business growth also slowed. Some survey respondents partially attributed this to uncertainty surrounding tomorrow’s general election, although others said that underlying conditions remained favourable.

The rate of job creation was lower than the 2014 average, but growth ‘remained robust’. Sub-contractor availability continued to contract, contributing to an increase in sub-contractor charges.

“The general election has given the sector pause for thought as procurement and supply management professionals reported a slowdown in the pace of new construction orders growth. Though the index still remains in positive terrain, this deceleration has been attributed to project delays and hesitancy as the country prepares to vote,” commented David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement and Supply (CIPS).

“Sub-contractors continue to be the winners in ongoing work, being in short supply and demanding higher rates for their labour – rising at the swiftest pace for almost 20 years. However, the sector continued to gear up and increase in-house staffing levels to meet the needs of higher levels of investment and to increase capacity and capability levels in supply chains. With this slack in new pipeline orders, suppliers were able to improve their performance as well as increase levels of stock to lighten any log jam in the supply of raw materials.”

“Though new business growth in the sector has slowed for eight months out of the last ten, business optimism is only slightly bruised and remains more solid than the average over the life of the index,” concluded Noble.

Adapted from press release by

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