UK Construction continues to grow, but slowing says CIPS

The UK construction industry grew at its slowest pace in nearly two years during April according to the CIPS/Markit Construction Purchasing Managers' Index (PMI).

Although it fell to 54.2 in April from 57.8 a month earlier, any reading above 50 indicates growth, while below 50 points to contraction. So we are still in growth, but the growth is slowing.

The figures indicate "a sharp slowdown" at the start of the second quarter, Markit said. One of the reasons, it added, is that some construction firms said spending decisions were being delayed ahead of the general election.

While the latest survey results suggested the construction industry was seeing "solid overall expansion", the pace of growth slowed even in the residential building sub-sector of the industry, which has driven industry-wide growth for most of the last two years.

New business growth has now slowed in eight of the past 10 months, Markit said, but construction firms said underlying conditions remained favourable.

Job creation in the sector remained robust in April, although the rate at which staff were being hired was still slower than the average in 2014, Markit added.

The latest survey comes just a week after the Office for National Statistics (ONS) released its first estimate of economic growth for the three months to the end of March, which showed growth slowed to 0.3%.

That was largely on the back of a slump in construction output, which fell 1.6% in the first quarter. That was its second successive quarterly fall, meaning the construction sector is technically in recession.

Tim Moore, senior economist at Markit, blamed uncertainty over the outcome of the general election, with building firms pointing to delays in client budget setting and a reduced commitment to building projects.

He said: "Despite experiencing pre-election risk aversion among clients in April, construction companies indicated a strong degree of confidence regarding the year-ahead outlook. As a result, job hiring was robust and little-changed since March, placing further pressure on skilled staff availability.

"Taken as a whole, the latest survey presents a far more upbeat picture than the curiously weak official construction output data for the first quarter of 2015."

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