UK construction faces 'shaky outlook'

Will Green is news editor of Supply Management
4 June 2018

UK construction is facing a “shaky-looking outlook” as growth stalled in May, according to the latest PMI.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index remained at 52.5 in May, unchanged on April and against the neutral reading of 50.

New business growth slipped back into decline against a background of general uncertainty while input price pressures sharpened.

Respondents blamed political and economic uncertainty, subdued retail conditions and fragile business confidence for weak demand for construction projects.

Residential work remained the strongest sub sector, though commercial and civil engineering remained in growth territory. Some firms reported unusually good weather conditions had supported activity and helped them catch up following the snow disruption.

Purchasing costs rose sharply in May, with members reporting higher costs for fuel, plastics and steel, while supplier delivery times continued to worsen.

Same Teague, economist at IHS Markit, said: “With new order books deteriorating and cost pressures picking back up, it’s not surprising to see construction firms taking a dimmer view of prospects and pulling back on hiring, all of which makes for a shaky looking outlook.”

Duncan Brock, group director at CIPS, said: “Higher prices for fuel, raw material shortages, higher labour costs combined with slow delivery times were further obstacles to growth as firms nervously assessed their workforce for much-needed talent and subcontractors could name their price.

“However, it’s encouraging to see the housing sector put in a strong performance for a second month running, after stumbling at the beginning of the year, and with only small improvements in the other sectors, residential building is keeping construction’s head above water.”

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