Construction output and housing activity growth slows


MarkitAccording to the latest Markit/CIPS UK Construction PMI report, growth momentum softened across the UK construction sector in November, with output, new business and employment all rising at slower rates than in the previous month.

Aside from the pre-election slowdown seen in April, overall output growth was the weakest since mid- 2013. All three broad areas of construction activity experienced a slowdown in output growth during November. Residential building activity increased at the weakest pace since June 2013, while civil engineering activity rose at the slowest rate for six months and was the worst performing subcategory.

Commercial construction activity topped the growth table, but the latest expansion was less marked than October’s eight-month high.

Tim Moore, senior economist at Markit, said: “The UK construction recovery is down but not out. Overall the latest results suggest that construction companies have become a little more cautious towards year-end, especially in terms of job hiring. However, a healthy flow of new tenders from public and private sector clients is expected to provide a tailwind to growth heading into 2016. Reflecting this, UK construction firms were again overwhelmingly positive about the outlook for their business activity, while only a small proportion anticipates falling output levels during the next 12 months.”

David Noble, group CEO at the Chartered Institute of Procurement & Supply, said: “Suppliers continued to struggle this month, citing shortages in key materials, supply chain capacity and skilled capability as the causes. But there is a question mark over the coming months as the housing sector, normally the star performer, may drag back on recovery along with the lack of availability of skilled staff. Many firms were forced to use more expensive contractors and, further combined with the hoped-for continued job growth failing to materialise, this may leave commentators wondering what’s next.

“Though there will inevitably be some disappointment that last month’s strong activity has largely petered out, the sector still operates in a positive environment of low interest rates, low inflation and lower commodity prices which has been reflected by respondents’ continued optimism for a good future.”

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