Construction output eases to 13-month low in November

A weaker increase in civil engineering has led to the slowest expansion of construction output since October 2013, an industry report has revealed.
According to the latest Markit/CIPS UK Construction Purchasing Managers’ Index (PMI, UK construction companies indicated a strong expansion of business activity in November, but the overall pace of growth moderated for the second month running to its least marked since October 2013.

This was highlighted by a fall in the seasonally adjusted PMI to 59.4 in November, from 61.4 in October.

All three broad areas of construction activity registered softer rates of expansion in the month, led by a marked slowdown in civil engineering, the weakest expansion of civil engineering activity since July 2013.

Residential building was the strongest performing area of activity in November. However, house building and commercial construction activity both expanded at the least marked rates since October 2013.

November data pointed to a rise in new business volumes for the nineteenth successive month, but the rate of expansion eased to its weakest since June 2013.

Despite softer rates of output and new business growth, the latest survey pointed to resilient and strong job creation across the construction sector.

Tim Moore, senior economist at Markit, said: “The construction sector remains a strong growth engine within the UK economy, but momentum has undoubtedly cooled since the summer. November’s survey highlights that housing, commercial and civil engineering activity all expanded at the slowest rates for over a year. A less favourable overall economic newsflow was cited as the key factor dampening otherwise buoyant demand patterns across the UK construction sector.

“Construction companies responded to rising workloads by boosting their staffing levels at an accelerated pace in November. Moreover, surging demand for skilled construction workers fed through to the steepest increase in sub-contractor charges since the survey began in 1997.

“Looking ahead, construction firms are optimistic overall about their growth prospects for the next 12 months, reflecting strong confidence that positive spending patterns will continue. However, some construction companies noted that uncertainties ahead of next year’s general election had weighed on business confidence and influenced clients’ willingness to commit to new projects.”