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Slowdown in residential construction

Posted at April 4, 2016 | Categories : News

UK construction companies indicated a sustained upturn in overall business activity during March but the pace of expansion remained relatively subdued in comparison to the trends seen for much of the past three years.

At 54.2 in March, the Markit/CIPS UK Construction Purchasing Managers’ Index posted above the neutral 50.0 value for the thirty-fifth month running. However, the latest reading was unchanged since February and indicated the joint-slowest rate of output growth since June 2013. Sub-sector data highlighted that faster rises in commercial work and civil engineering activity were offset by another slowdown in residential building. The latest increase in housing activity was only marginal and the weakest recorded since January 2013.  

Tim Moore, senior economist at Markit, comments: “Construction firms were reliant on a rebound in commercial building and resurgent civil engineering growth to offset the slowdown in housing activity. Civil engineering delivered its strongest performance for just over a year, suggesting that a healthy pipeline of infrastructure projects continues to boost construction output.  

“However, heightened uncertainty about the business outlook appears to have weighed on overall construction demand so far in 2016, with survey respondents citing cautious client spending patterns and a reduced willingness to commit to new projects.

“As a result, volumes of new work disappointed in March as order book growth slipped for the third month in a row and reached its weakest since the pre-election blip last year.”