UK construction activity slips again, but at a slower rate

According to the latest Markit/CIPS monthly survey of purchasing managers in the construction industry, output in the sector decreased once more in March but at the slowest rate since October of last year.  The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) which measures overall output in the sector,  was calculated at  47.2 during March, up from 46.8 in February. Scores below 50 are deemed to indicate a contraction in the market. The reduced output was put down to a combination of subdued underlying demand and unusually bad weather.

Construction companies are now forecasting a rise in output over the course of the coming year ahead, according to the survey. Markit senior economist Tim Moore, author of the Markit/CIPS Construction PMI, said: “Shrinking investment spending and intermittent output disruptions amid unusually bad weather kept the UK Construction PMI entrenched in contraction territory at the end of the first quarter. The negative print for construction output mirrors that seen for manufacturing, and now leaves the service sector as the last great hope for avoiding another slide in UK GDP.”

Chartered Institute of Purchasing & Supply chief executive David Noble said:  “While the government’s focus on housing appears to have had a positive effect as it outperformed other sectors, civil engineering is a different story; here the lack of public spending has resulted in the fastest rate of contraction since October 2009. At the same time, the commercial sector is doing little to pick up the slack and experienced its second weakest reading in 39 months. The latest figures complete the picture of a fairly dismal first quarter, which has admittedly been affected by unusually bad weather, with output and employment down on the last quarter of 2012.  New orders on the other hand are less hard to come by in comparison, which offers some justification for the boost in confidence.”