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UK construction fades to near-stagnation in January

Staff Writer |
UK construction companies reported a subdued start to 2018, with total industry activity barely rising.

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A return to contraction in residential building activity was accompanied by near-stagnant commercial and civil engineering activity.

New orders declined, linked by many companies to market uncertainty.

On a more positive note, confidence towards future growth prospects improved, with many firms anticipating an increase in new project wins later in the year.

Meanwhile, intense cost pressures continued across the UK construction sector.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI® ) posted 50.2 in January, down from 52.2 in December.

The figure was just above the neutral 50.0 no-change mark, thereby signalling a fractional rate of growth that was the weakest for four months.

The latest data signalled that the sector’s main driver of growth in recent months, house building, slipped into decline, ending a 16-month expansion.

Meanwhile, commercial building returned to growth, reversing a six-month period of decline, though the pace of expansion was only marginal.

Civil engineering activity also rose, representing an improvement on the declines seen late last year, though the increase was likewise only very modest.

The rate of job creation eased to an 18-month low in line with the reduced growth of building activity.

Whilst some firms hired additional staff in anticipation of future new project wins, others reported job shedding in response to lower workloads.

New orders received by UK construction companies decreased slightly for the first time in four months during the latest survey period.

Many respondents linked falling new business to worries fuelled by general political and economic uncertainty.

Despite softening marginally since December, cost pressures remained intense in January.

Inflation in input costs was driven by a variety of materials such as bricks, copper and timber.

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