UK construction growth slows throughout end of 2018
In the three months to December 2018, growth slowed in the commercial property sector of the construction industry.
A drop in the IHS Markit/CIPS UK Construction Purchasing Manager’s Index to 52.8 in December, from 53.4 in November, shows a three-month low in the growth sector.
While the last decrease in growth was put down to poor weather including the Beast From The East, it seems there shows no change in the reasoning behind December’s drop. Poor weather, including unusual amounts of rain, played its part.
However, despite the slowing in growth, the Purchasing Manager’s Index posted above the 50.0 no-change value for the ninth month in a row.
What the experts had to say
Tim Moore, Economics Associate Director at IHS Markit, said, “UK construction firms signalled a slowdown in housing and commercial activity growth during December, which more than offset a strong performance for civil engineering at the end of 2018.
“Subdued domestic economic conditions and an intense headwind from political uncertainty resulted in the weakest upturn in commercial work for seven months. Strong demand among first-time buyers meant that house building was the fastest growing category of construction output during 2018. However, construction companies indicared a renewed loss of momentum in December. Residential growth remains much softer than the two-and-a-half year peak achieved last summer.
“Civil engineering was the stand-out area of construction growth in December, with activity rising at the fastest pace since May 2017. Survey respondents also noted that the strengthening infrastructure pipeline is set to become a key engine of growth in 2019, despite concerns about possible delays to the delivery of major projects.
“An expected boost from transport and energy projects underpinned a rise in business optimism to an eight-month high in December. Construction sector confidence was also helped by softer input cost inflation and signs of a turnaround in supply chain difficulties from the low point seen last August. However, levels of optimism remained subdued in relation to those recorded by the survey over much of the past six years, largely reflecting concerns that Brexit uncertainty will continue to encourage delays with decision-making, especially on commercial projects.”
Group Director at CIPS, Duncan Brock, said, “With a slight rise in new orders and a softening on overall activity growth, firms continued to be impacted by Brexit-related uncertainty and reluctance by clients to place orders especially for commercial projects.
“The saviours of the sector were residential building expanding for the 11th month in a row and civil engineering work rising at the fastest pace since May 2017, but additional underlying pressures were still in evidence.
“Continued price increased for raw materials remained a challenge, but suppliers at least were able to deliver their best performance since September 2016 in spite of extra demand as a result of stockpiling.”