Construction industry sees growth slow

2 November 2004
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02 November 2004 | Gareth Mytton

UK builders enjoyed another month of strong growth in October although it slowed on recent months, according to the latest purchasing managers' index (PMI) report.

The PMI - a composite indicator of overall sector conditions, in which 50 indicates no change on the previous month - stood at 55, down from 56.8 in September.

Activity eased in all three sectors of the construction economy. The commercial building sector was again the strongest grower, at 56.7, followed by housing (55.3) and civil engineering (51.3).

Companies blamed the slower expansion on a fall in the growth rate of new orders (57.3).

However, purchasing activity accelerated. Nearly a quarter of companies bought more materials on the month, with the quantity of purchases index rising to 55.7.

They also suffered from worsening supplier delivery times (45.2), largely caused by global shortages of steel.

Input price inflation eased from June's all-time high, but it remained at historically high levels at 72.6. The rise was again linked to the cost of oil, which have forced energy and fuel costs, and higher steel prices.

Companies used subcontractors more than in September, and their availability increased, although there were shortages in nine categories. Their rates also went up, while their standards fell slightly.

• Coverage of previous months' UK construction PMI reports is available at http://www.supplymanagement.com/pmi.

SMnov2004

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