January data pointed to a renewed slowdown in output growth across the UK construction sector.
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At 55.0, down from 57.8 in December, the headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) remained well above the 50.0 no-change value, but signalled the slowest rate of expansion since April 2015.
Moreover, aside from the pre-election slowdown recorded last year, the latest reading was the lowest since June 2013. A number of survey respondents noted that softer new business growth had acted as a brake on output growth and staff hiring at the start of 2016.
Higher levels of output were recorded across all three broad areas of construction activity monitored by the survey. Commercial work remained the best performing category in January, but the latest upturn was still the slowest since June 2015.
At the same time, house building ac
tivity expanded at the secondweakes
weakest pace for just over two-and-a-half years. Civil engineering was again the weakest performing area of activity overall, despite rebounding slightly from December’s eight-month low.
Mirroring the trend for business activity, latest data signalled a slowdown in new order growth at the start of 2016. The latest increase in incoming new work was the slowest for four months. Survey respondents cited greater caution among clients and less favourable underlying demand conditions.
That said, a number of construction companies also noted a sustained upturn in infrastructure-related contracts and new residential building work in January.
Looking ahead, survey respondents remained highly upbeat overall about their prospects for growth over the next 12 months, with around 46% expecting a rise in business activity and only 6% anticipating a reduction.
However, the degree of positive sentiment eased for the third month running and was the lowest since December 2014. While there were widespread reports of strong order books and planned company expansions in 2016, some firms highlighted concerns that underlying demand conditions had started to soften. ■