Confidence in UK construction sector highest for nine years – PMI report

Rebecca Ellinor Tyler is former editor of Supply Management
2 April 2015

UK construction companies are positive about their prospects for growth over the next year, said Markit senior economist and author of today's Markit/CIPS UK Construction Purchasing Managers’ Index Tim Moore.

He said UK construction output growth has settled in at a strong pace so far in 2015, although the recovery has “lost some of its swagger since last year”. However, improving economic fundamentals, strong order books and a healthy pool of new invitations to tender meant business confidence was high, he added.

More than half of the survey panel (57 per cent) forecast a rise in output over the year ahead, while only 3 per cent expect a fall, which equates to the strongest degree of construction sector optimism for just over nine years.

The overall headline seasonally adjusted PMI posted 57.8 in March, which is down from 60.1 in February and the lowest for three months, but still well above the 50 no-change mark.

All three areas of construction activity saw a loss of momentum since February. Housing remained the best performing sub-sector, followed by commercial construction. Meanwhile, civil engineering output growth eased markedly since the previous month and was the weakest performing category of activity.

New business volumes continued to rise at a strong pace in March, although the rate of expansion eased from February’s four-month high.

Companies that reported an upturn in new orders generally cited improving economic conditions and greater underlying client demand. However, some construction firms noted that uncertainty relating to the forthcoming General Election had encouraged clients to delay spending decisions.

David Noble, group CEO of CIPS, said: “The main takeaway from this month must be the highest levels of confidence seen in the construction sector for almost a decade. Though there may be some low-level obstacles still to come, the sector gets the green light as there is evidently belief that the future for the construction sector is a sustainable one.”

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