UK Construction Sector Grows at Slowest Pace in Six Months in September

Amid nearing Brexit, the construction sector in the UK exhibited less confidence which forced the construction activities to grow at a slowest pace in the six months in September, said a private survey on Tuesday (2).

At 52.1 in September, down from 52.9 in August, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) signalled the weakest upturn in output for six months.

UK construction companies indicated a sustained increase in the business activity during September, but the rate of expansion slowed for the second month running.

Civil engineering was the worst performing subcategory of construction work, with activity declining at a slightly quicker rate in September. House building and commercial construction continued to increase at a solid pace, although the latest survey indicated weaker growth than in August.

A number of firms suggested that subdued economic conditions so far in 2018 remained a factor holding back business activity growth.

A robust rise in staffing numbers was reported in September, helped by another improvement in new order books. The latest increase in employment was the fastest since December 2015, PMI data added.

Delivery times for construction products and materials continued to lengthen in September. Intense supply chain pressures were attributed to stock shortages at vendors and stretched transportation capacity.

In September, the overall rate of input price inflation was the fastest for three months. Survey respondents widely cited higher fuel prices and greater raw material costs (particularly timber), the survey noted.

September data indicated a further decline in optimism about the year ahead business outlook. The degree of positive sentiment reported by survey respondents was the second-lowest since February 2013.

Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI said,“UK construction firms experienced softer output growth during September, with house building, commercial and civil engineering all losing momentum. A lack of new work to replace completed projects meant that civil engineering saw an overall decline in activity for the second month running and remained the main laggard...”

Construction companies noted that political uncertainty and investor concerns about Brexit had dampened confidence in September. Where a rise in business activity was projected, forthcoming energy and transport projects remained the main areas of optimism.