Construction growth slows

4 April 2017

Construction firms are upbeat about their near-term growth prospects as client confidence levels out after the Brexit referendum, a PMI survey of buyers has shown.

Growth in the construction sector slowed in March, caused by a weaker rise in the housing sector and tighter client budgets. But less “Brexit-related anxiety” and a resilient economy has helped to create new invitations to tender and improved business confidence, according to the Markit/CIPS UK Construction PMI.

The index – based on a monthly survey of buyers – dropped slightly to 52.2 in March, down from 52.5 in February. A score above 50 signifies growth and a score below 50 indicates contraction.

While client confidence was reported to be stable, business confidence increased to “among the highest since the end of 2015”, according to Tim Moore, senior economist at IHS Markit.

Input buying declined month-on-month for only the second time since September, and supplier performance dropped at one of the fastest rates in the past two years. “Overall purchasing activity in the construction sector was disappointingly tame, shackled by a lack of new orders and rising costs,” said Duncan Brock, CIPS director of customer relationships.

“Pressure on suppliers remained intense, as they battled against lower stocks and made greater efforts to fight the pincer movement of a shortage in some materials and the continued force of higher global commodity prices,” he added.

However, commercial construction rebounded in March, driven by rising infrastructure spending and a strong pipeline of new work.

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