Construction output growth hits 10-month low in February


February data has highlighted a further loss of growth momentum across the UK construction sector, with output, new orders and employment all expanding at slower rates than at the start of 2016.

The headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered 54.2 in February, down from 55.0 in January and the lowest since April 2015.

Although still above the 50.0 value that separates expansion from contraction, the latest reading pointed to one of the weakest rises in construction output seen over the past two-and-a-half years.

For the first time since January 2013, residential building was the worst performing sub-category of construction output, and moreover, the latest rise in housing activity was the slowest recorded since June 2013.

Reports from survey respondents suggested that less favourable demand conditions and greater uncertainty about the economic outlook continued to act as a brake on the construction sector.

The latest rise in overall volumes of new work was the slowest seen since April 2015 while construction firms noted that client spending was still generally expanding, there were some reports that business confidence had moderated in February and weighed on clients’ willingness to commit to new projects.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “UK construction firms remained in expansion mode during February, but a loss of momentum within the residential building sector meant that overall output growth was the weakest since April 2015. Aside from the pre-election slowdown last year, the latest upturn in construction output was the weakest for over-two-and-a-half years.

“Survey respondents noted that underlying business conditions remained favourable, especially in relation to commercial building and infrastructure-related work, but some clients had been hesitant to commit to new projects so far in 2016.

“Reflecting this, new order growth weakened again and construction firms were the least optimistic about their year-ahead growth prospects since December 2014.”

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