UK construction growth slips to nine-month low

Latest News Wed, Mar 23, 2016 9:20 AM

UK construction growth slips to nine-month low

Growth in Britain's construction industry was its weakest in nine months in January after a short-lived recovery in December.

The Markit/CIPS UK Construction Purchasing Managers' Index weakened to 55.0 from 57.8, below the median forecast of 57.5 in a Reuters poll of economists.

Order books grew at the weakest pace in four months and construction firms took on staff at the slowest rate since September 2013.

Housebuilding and commercial property work were the biggest drivers behind the slowdown in January, according to survey compiler Markit.

"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," Markit economist Tim Moore said.

The PMI contrasted with a similar gauge of Britain's manufacturing sector published on Monday which showed the factory sector had a stronger-than expected start to 2016, raising hope that Britain would not be hit too hard by a slowdown in the global economy.

Analysts look at the surveys for the early signs they give about the broader economy. However, the PMIs for the construction sector have been at odds with data used in official growth figures in recent months.

Optimism among construction companies waned to its lowest level since December 2014, the PMI showed.

However, the Brick Development Association, pointed out that brick production has risen significantly over the last two years.  Department for Business, Innovation and Skills figures, also released yesterday, point to brick production in December 2015 being 16% higher than in December 2014.

Michael Ankers, Chairman of the BDA, commented in response to this: “The BDA represents 99% of the brick manufacturers in the UK.  We can report with absolute authority that there has been a significant increase in brick production over the last twelve months and this is confirmed by the latest ONS statistics.

"If there are delivery issues further down the supply chain it would be very helpful to understand the cause.  Unfortunately, CIPS was unable to provide information on the number or organisation type of respondents finding bricks hard to obtain.”

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