UK construction firms 'preparing for softer growth'

Will Green is news editor of Supply Management
2 March 2016

Output growth in the UK construction sector hit a 10-month low February, according to a survey of buyers.

The Markit/CIPS UK Construction Purchasing Managers’ Index dropped to 54.2 in February, down from 55 in January and against the no-change position of 50.

The slowdown was underpinned by the weakest rise in housing activity since June 2013, which was the worst performing sub-category of construction output.

Growth of commercial building work moderated in February, with the rate of expansion the softest since May 2015, but civil engineering bucked the trend with growth accelerating to its fastest for five months.

Firms suggested less favourable demand conditions and greater uncertainty about the economic outlook continued to act as a brake on the construction sector.

New business growth was the slowest seen since April 2015 while construction firms were the least confident about the coming 12 months since December 2014.

The latest rise in staffing was the slowest recorded since August 2013 and weaker projections for output growth contributed to more cautious input buying policies in February.

Supplier delivery times lengthened again, at the second-strongest pace since June 2015, with firms noting that a squeeze on stock availability among suppliers continued to weigh on vendor performance. Input cost inflation was close to the lowest seen over the past three years.

David Noble, group CEO, CIPS, said: “Though overall growth was maintained, business confidence for the future was at its lowest since December 2014. The next few months will be critical to the understanding of whether this dampened optimism was justified and whether there are still more serious issues to be unearthed.”

Tim Moore, senior economist at Markit, said: “More cautious purchasing strategies can be seen as another indication that construction firms are preparing for an extended period of softer growth this year.”

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