Construction growth slips to six-month low

Will Green is news editor of Supply Management
2 October 2018

Growth in UK construction hit a six-month low in September, according to the latest PMI.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index slipped to 52.1 in September, down on 52.9 in August and against the neutral 50 reading.

Civil engineering was the worst performing sub-category, and while housing and commercial construction increased at a solid pace, the index signalled the weakest upturn in output for six months.

Delivery times for construction products and materials continued to lengthen and intense supply chain pressures were attributed to stock shortages at vendors and stretched transportation capacity. However, the downturn in vendor performance was slightly less marked than the three-and-a-half year low seen in August.

There was a sharp and accelerated increase in average cost burdens in September, with the overall rate of input price inflation the fastest for three months. Respondents widely cited higher fuel prices and greater raw material costs, particularly timber.

The degree of positive sentiment reported by respondents was the second-lowest since February 2013, amid political uncertainty and investor concerns about Brexit.

Duncan Brock, group director at CIPS, said: “A cause of this malaise pointed to increased cost burdens with both fuel prices on the rise, and acute shortages in raw materials, as supplier delivery times have lengthened to an extent not seen since 2015.”

Tim Moore, associate director at IHS Markit, said: “Construction companies continued to note that political uncertainty acted a key drag on decision-making, with Brexit worries encouraging a wait-and-see approach to spending among clients. The main areas reported as likely to see a boost in the coming year were construction work related to large-scale energy and transport projects.”

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