UK Construction Sector Shrinks Slightly


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UK construction activity declined in January for the first time in eight months amid weakness in commercial activity and house building.

The CIPS UK Construction purchasing managers’ index eased to 49.2 from 54.6 in December, survey data from IHS Markit showed Thursday. Economists had expected a score of 52.9.

A reading below 50 suggest contraction in the sector. The decline was the first since May last year.

New order growth was the weakest since June last year as clients hesitated to place orders, especially for commercial projects, due to the third national lockdown and concerns about the near-term economic outlook.
Supplier performance was severely hurt by transport shortages and delays at UK ports during January.
Commercial activity and civil engineering work registered renewed falls, while residential projects grew strongly, though the pace was the slowest since the rebound started in June.
Employment decreased in January, reversing the marginal growth in the previous month, largely due to the non-replacement of leavers following project completions.

Rising prices for plaster, steel and timber drove the input price inflation to its highest for just over two-and-a-half years.

Business expectations for the year ahead remained positive, but eased to a three-month low.
“The latest survey highlighted that construction companies have become more cautious about the business outlook,” IHS Markit Economics Director Tim Moore said.

“Output rebounded quickly after stoppages on site at the start of the pandemic, but hesitancy among clients in January and worries about near-term economic conditions resulted in a dip in growth expectations for the first time in six months.”


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