‘Chill winds’ blow in construction as boom begins to slow

Paul Snell is managing editor at Supply Management
4 November 2014

The UK construction sector continued to expand in October, but at the slowest rate for five months.

Although the pace of growth has eased, the latest Markit/CIPS Construction Purchasing Managers’ Index still posted a reading signalling strong expansion. The index, where a figure above 50 indicates growth, recorded 61.4 last month, compared with 64.2 in SeptemberActivity in the sector has been expanding for 18 consecutive months, the longest period of growth since the start of the financial crisis.

Even though commercial was the strongest performing sub-sector, expansion was at its slowest for five months. Growth in the housing sub-sector was at its weakest for a year, and much slower than in the month previous. The civil engineering sub-sector was the weakest performer of the three, but growth remained above the long-run average.

“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,” said Tim Moore, senior economist at Markit.

Despite the slowdown, buyers in the sector remained confident about future prospects. Employment continued to rise in October, and more than half of those polled anticipate a rise in output over the next 12 months, while just 9 per cent believe it will contract.

David Noble, group CEO, CIPS: “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.”

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