This weeks data from IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) has pointed to a renewed slowdown in output growth across the UK construction sector, with all three broad categories of activity recording a loss of momentum since the previous month. However, there were signs of resilience in terms of underlying workloads, with the August data signalling another solid upturn in new business.
Tim Moore, associate director at IHS Markit and author of the PMI, said: “The construction sector slipped back into a slower growth phase in August, with this summer’s catch- up effect starting to unwind after projects were delayed by adverse weather at the start of 2018.
“Civil engineering was the worst performing area, with output in this category falling for the first time since March amid reports citing a lack of new work on infrastructure projects. House building saw a particularly sharp slowdown since July, meaning that commercial construction was the fastest growing sub-sector in August.”
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “If there is anything positive to note from this month, it would be that the rate of hiring remained strong. However, persistent pressures from skills shortages and slow rates of new orders will continue to hit business optimism still trailing below the survey’s average.
Anecdotal evidence cited resilient client demand and supportive economic conditions, but there were also reports that Brexit- related uncertainty continued to hold back investment spending. Higher overall workloads encouraged additional staff recruitment across the construction sector in August. Survey respondents noted tight labour market conditions and shortages of suitably skilled candidates to fill vacancies.
Purchasing activity increased for the eleventh consecutive month in August, although the latest upturn was the weakest since March. Low stock and labour shortages among suppliers continued to impact on delivery times for construction products and materials. The latest deterioration in supplier performance was the greatest seen for almost three- and-a-half years. Despite stretched supply chains and rising energy-related costs, latest data indicated that input price inflation edged down to its lowest since July 2016.
UK construction companies are optimistic that business activity will expand over the coming 12 months, but the degree of confidence eased to its weakest since May