UK construction 'near stagnation'

Will Green is news editor of Supply Management
2 February 2018

Growth in the UK construction sector slumped almost to the point of stagnation in January, according to the latest PMI.

Residential building activity slipped into decline, while the commercial and civil engineering sub sectors expanded only marginally.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index dropped to 50.2 in January, a four-month low, down on 52.2 in December and only just above the neutral reading of 50.

Duncan Brock, director of customer relationships at CIPS, described growth as “near stagnation”. He said: “The blocks to progress included a sharp rise in costs and a shortage of key materials, which contributed to longer lead times as supplier capabilities were stretched to their limits.”

Sam Teague, economist at IHS Markit, said: “A contraction in house building added to lacklustre commercial building and civil engineering markets, and reduced inflows of new work suggest overall activity could slip into decline in February.

“Encouragingly, however, firms generally expect things to improve later in the year. Constructors’ optimism towards future growth prospects reached a seven-month high. Many forecasted that the soft patch in construction demand would be short-lived and new project wins would pick up throughout the year, though this will inevitably depend on how Brexit negotiations play out.”

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