February falls flat for construction
The latest IHS/CIPS UK Construction PMI data has been released, showing subdued growth for construction.
The figures show marginal rises in the sector, with a decline in new work and strong inflation combining to create difficult conditions in the sector.
Data collected during February reflects a continuation of market conditions which have prevailed since December. Total business activity increased only marginally during the latest survey period, while new work decreased for the second month running. Respondents to the survey highlighted fragile business confidence and ongoing political uncertainty as key factors in holding back client demand, with strong input cost pressures, higher raw material prices, fuel bills and staff wages noted as contributing factors.
February’s data logged 51.4 in the Index, slightly up from January’s four-month low of 50.2. These figures show just a marginal increase in construction output during February, and are lower than the average 2017 figure of 52.3.
Looking more closely at the data, civil engineering emerged as the worse performer, with activity falling at the sharpest pace for five months. While the figures have no doubt been affected by a lull in house building, which logged in at its weakest rate since Q3 2016.
Commercial construction, which has been lagging recently, provided a bright spot in the figures, with an upturn in this sector growing at the fastest rate since May 2017. Although new business volumes fell during February, the rate of decline was only marginal and slightly slower than seen at the start of the year.
Comments Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI®: “The construction sector endured another difficult month during February, with fragile business confidence, entrenched political uncertainty and softer housing market conditions all factors keeping growth in the slow lane. Residential work appears on track to experience its weakest quarter since Q3 2016, suggesting that house building is losing its status as the main engine of construction growth.
“Civil engineering activity was the worst performing category in February, with survey respondents again commenting on a shallow pool of work to replace projects reaching completion. While subdued house building and infrastructure work acted as a brake on the construction sector, this was partly offset by a sustained turnaround in commercial building.
“The increase in work on commercial projects during February was one of the strongest seen over the past two years. Some construction firms noted that greater industrial demand, alongside structural changes in consumer spending habits, had contributed to new project opportunities.
“Despite pockets of resilience in the UK construction sector, there was little sign of an imminent turnaround in overall growth momentum. Reflecting this, total volumes of new work dropped for the second month running in February and business optimism was among the weakest recorded by the survey since 2013.”
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