Construction Industry Continues To Expand At 'Subdued Pace'

The UK construction industry is continuing to expand at a 'relatively subdued' pace, according to new research.

The latest Markit/CIPS UK Construction PMI index shows the sector is heading towards three full years of growth.

The seasonally adjusted statistics posted a score of 54.2 in March, putting it above the neutral 50.0 value for the 35th month running.

However, the latest reading was unchanged since February and indicated the joint-slowest rate of output growth since June 2013.

Reasons for the slowdown include slower growth of incoming new work, greater uncertainty on business outlook and greater caution among construction companies in terms of staff hiring, which eased to its slowest rate since June 2013.

In addition, sub-contractor usage in March decreased at a slightly steeper pace than in February, while a softer upturn in overall workloads across the sector led to further slowdowns in input buying growth.


Suppliers' delivery times also lengthened in March, but input cost inflation moderated for the second month running to its weakest since February 2010.

However, construction companies remain optimistic about the future, with 51% of survey respondents expecting to see a rise in business activity over the next 12 months.

David Noble, Group CEO at the Chartered Institute of Procurement & Supply, said: "There was little comfort to be had this month, as the construction sector was awash with caution and hesitancy not seen since the pre-election lull of 2015. Clients were unwilling to commit to new contracts or expand existing work, meaning that new business growth was at its most fragile since April 2015.

"Where the housing sector was once the star of the show, it became the weakest performer in March. And hopes for more positive employment news were dashed, as the rate of growth in staffing levels slowed to a pace last seen in June 2013; and amidst a landscape of continuing skills shortages after the end of the recession.

"Though activity and new work slowed, construction firms enjoyed the slowest rate of cost increases for just over six years, largely due to ongoing falls in commodity prices. There was evidently a loss of momentum in the sector, though cautious optimism was sustained as a result of encouraging domestic economic conditions, but against a background of some political uncertainty."

(LM)