UK housing sector is 'subdued'

Will Green is news editor of Supply Management
2 February 2017

UK construction growth in January slowed to the weakest level since the post-referendum recovery began in September last year.

The Markit/CIPS UK Construction Purchasing Managers' Index slumped to 52.2 in January, down on 54.2 in December and against the neutral reading of 50, which indicates neither growth nor contraction.

All three sub sectors – housing, commercial and civil engineering ­– showed softer expansion, against a background of weaker new order growth and less willingness to spend among clients.

Housebuilding remained the best-performing category, but its expansion was the weakest for five months.

Meanwhile, input cost inflation increased at the steepest pace for almost eight-and-a-half years, widely linked to the weaker pound and rising prices for imported materials.

Greater pressure on supplier capacity meant lead times from vendors lengthened to the largest degree since June 2015.

However, job creation hit an eight-month high, mainly attributed to planned project starts in the coming months.

And more than half of respondents forecast a rise in business activity over the next 12 months, against just 7% who expected a drop.

David Noble, group CEO, CIPS, said: "The dark cloud on the horizon was the continuing pressures on supply chains. Material shortages, lengthening delivery times and supplier performance, the weakest since June 2015, could become a roadblock to the sector’s continuing growth."

Tim Moore, senior economist at IHS Markit, said: "UK construction firms experienced a subdued start to 2017, with all the key categories of activity losing momentum." 

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