Stakeholder - Gateley Vinden

Construction output stalls

The latest IHS Markit/CIPS UK Construction PMI® survey has found that output from the industry stalled in January.

Data collected throughout January has shown that PMI has fallen to a four-month low of 50.2, down from 52.2 in December. UK construction companies reported a slow start to 2018, with industry activity barely rising, keeping its head just above the growth marker.

The change in fortunes reflects a contraction in residential building activity, which was leading growth in 2017. After 16-months of growth this drop in housing activity has led to the halt in expansion.

A decline in new orders is also leading to pressures, linked by many companies to market uncertainty over Brexit and political concerns.

However, many companies still anticipate a positive year, with greater confidence towards future growth prospects reported. Many firms are anticipating an increase in new project wins later in the year. Both commercial building and civil engineering reported rises in activity, reversing six months of decline in commercial, and civil engineering showing modest growth.

Martin Bennett, Director at the Vinden Partnership commented: “Even with a difficult start to 2017, the construction sector is looking beyond immediate problems to a more positive future.

“Companies are looking to later in the year and are seeing signs of improvement. The dip in housebuilding is likely to recover soon and continue to lead the industry growth. Positive signs are the growth in both commercial and civil engineering, which have been lagging behind recently.

“However, sharp rises in costs and a shortage of key materials, provides a challenging background, and the impact of political and economic uncertainty remains at the beginning of 2018.”

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