UK construction industry suffers ‘slight loss of momentum’

Paul Snell is managing editor at Supply Management
4 August 2015

Activity in the UK construction sector slowed in July as the rate of new business cooled.

The Markit/CIPS UK Construction Purchasing Managers’ Index, where a figure above 50 indicates expansion, registered a figure of 57.1 last month. This was slightly lower than the 58.1 seen in June, indicating "a slight loss of momentum" following recent strong growth.

Residential building was still the strongest performer of the three main sub-sectors, but also reported the second-slowest rate of growth since June 2013. Civil engineering also grew more slowly, but commercial activity rose at its fastest since March.

Survey respondents reported more opportunities to tender, and the restart of delayed projects also contributed to an increase in new business. Job creation also rose more slowly, but there were still reports of skills shortages across the sector.

Supply chain pressures also began to reduce, but input prices continued to rise because of low stocks at suppliers and strong demand for construction materials.

“July’s growth slowdown is the first for three months and perhaps a sign that the post-election impact on construction confidence has started to diminish,” said Tim Moore, senior economist at Markit. “Reflecting this, UK construction firms’ business activity expectations moderated from June’s 11-year peak but remain strong overall.”

David Noble, group CEO, CIPS, said: “Overall the sector’s optimism was still strong, as staffing levels remained high in anticipation of future success, though issues around sourcing skilled individuals remained a thorn in the side of the sector.”

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