UK construction activity rises but at slower pace

Gurjit Degun
4 March 2014

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4 March 2014 | Gurjit Degun

The UK construction sector saw activity rise for the 10th month in a row in February, but the pace of expansion has eased since January.

The Markit/CIPS UK Construction Purchasing Managers’ Index posted 62.6 last month, down from a 77-month high of 64.6 in January. But the PMI has reported above the 50 baseline indicating expansion every month since May 2013.

Survey respondents said the adverse weather conditions contributed to “softer construction output growth” in February, especially house building activity.

Civil engineering activity was the best performing area of construction in February, with the pace of expansion the steepest since the series began in April 1997. Construction firms saw greater spending among local authorities on capital projects and maintenance, in some cases in response to recent flooding and poor weather conditions.

Higher levels of output and new business resulted in further sharp increases in both employment and purchasing activity. The latest rise in staffing levels was the fastest for three months, which some respondents linked to “robust confidence” about the business outlook.

Strong demand for inputs and low stocks at suppliers led to another marked lengthening of vendor lead times in February. Construction firms said supply chain pressures contributed to higher costs, with the overall rate of input price inflation accelerating from the five-month low recorded in January.

Tim Moore, senior economist at Markit, said: “In the latest survey there were six construction companies forecasting higher activity over the year ahead for every one anticipating a reduction.

“As a result, there appears an undiminished depth of belief among construction companies that strong growth will be sustained this year, helped by more favourable economic conditions and an ongoing house building recovery.”

CIPS group CEO David Noble added: “Bad weather took a bite out of progress in house building, but UK construction remains on a strong growth trajectory in February.”

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