January saw weakest expansion of UK construction output for nine months

MarkitA slowdown in new business growth has resulted in the lowest rate of expansion of the construction buyers index since last April.

The latest Markit/CIPS UK Construction PMI index dropped to 55 in January from 57.8 in December.

Survey respondents pointed to softer new business growth for acting as a brake on output growth and staff hiring at the start of 2016, though they remained highly upbeat overall about their prospects for growth over the next 12 months, with around 46 per cent expecting a rise in business activity and only 6 per cent anticipating a reduction.

Higher levels of output were recorded across all three broad areas of construction activity monitored by the survey. Commercial work remained the best performing category in January, but the latest upturn was still the slowest since June 2015. At the same time, house building activity expanded at the second weakest pace for just over two-and-a-half years. Civil engineering was again the weakest performing area of activity overall, despite rebounding slightly from December’s eight-month low.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “UK construction firms struggled for momentum at the start of this year, with heightened economic uncertainty acting as a brake on new orders and contributing to one of the weakest rises in output levels since the summer of 2013.

“Softer growth of house building activity and a more subdued increase in commercial construction were the main factors behind the slowdown.”

David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply, added: “The sector continued along a slow, relatively steady path this month with continuing growth but at a weaker rate than that seen in recent months and with some lack of clarity on its future destination.

“Struggling to keep up with the recovery of recent months, the new orders index was the lowest for four months and overall activity growth softened, bringing with it lower job hiring and more caution about the sustainability of the current economic climate hit by adverse global conditions.

“The housing sub-sector continued to disappoint and though still above the no change point, was at its second weakest level of growth since June 2013.

“Supply chains were weighed down by the pressures of a shortage of bricks and blocks as delivery times became longer in an attempt to fulfil recent orders from last year. Optimism was still high, however, as business expansion plans continued although at a slightly more muted pace.”

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