UK construction sector shows signs of stabilisation — PMI

The UK construction sector showed signs of stability in April as it narrowly returned to growth, helped by stronger levels of house building, according to a closely watched survey.

The IHS Markit purchasing managers’ index for the construction industry rose to 50.5 in April, higher than 49.7 of the previous month and marginally better than analysts’ expectations. A reading above 50 indicates expansion rather than contraction.

The figure was buoyed by residential work, which grew at its fastest pace of the year so far, while commercial work and civil engineering activity continued to decline. A number of firms linked lower commercial construction to Brexit-related uncertainty and delayed client spending decisions, according to the report.

“The strongest rise in residential building since December 2018 was the only saviour of a sector otherwise heading for contraction again this month as deferred client decisions continued to impact on larger commercial and infrastructure projects, throwing the industry off-balance,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.

New orders fell for the first time since May 2018, while business optimism eased to its lowest since last October.

“Worryingly, forward-looking elements of the survey were weaker which bodes ill for construction activity in the near term at least,” said Howard Archer, chief economic adviser at EY ITEM Club. “This was attributed to political uncertainty, increased concerns over UK economy and subdued demand for commercial and infrastructure projects as Brexit uncertainties contributed to client unwillingness to commit to new projects.”

Despite the slight growth, the sector saw a small amount of jobs cut in April after more than two-and-a-half years of increases.

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