Optimism slips for UK construction

Will Green is news editor of Supply Management
4 July 2017

Growth in the UK construction sector slowed in June as business optimism slipped to its lowest so far this year, according to the latest PMI.

The Markit/CIPS UK Construction Purchasing Managers’ Index eased to 54.8 in June, down on 56 in May and against the no-change reading of 50.

Survey respondents commented on signs of risk aversion among clients, reflecting concerns about the economic outlook and political uncertainty. Firms were also the least optimistic about near-term growth prospects since December 2016.

Softer growth was recorded across all categories, including residential, commercial and civil engineering.

Meanwhile, demand for construction materials continued to rise, placing pressure on stocks held by vendors and resulting in longer delivery times. Combined with the weak pound, this resulted in an increase in cost burdens for construction firms.

Duncan Brock, director of customer relationships at CIPS, said: “With some doubt edging into the psyche of the construction industry about positive trading conditions, the sector will be guarding against continuing higher input prices with another eye on the possibility of rising interest rates as well.”

Tim Moore, senior economist at IHS Markit, said: “Fragile business sentiment led to delayed decision-making on large projects and greater concern about he outlook for workloads during the next 12 months.

“While construction firms remain upbeat overall about their near-term growth prospects, the degree of confidence fell to its lowest so far this year.”

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