CIPS: UK Construction Activity Growth Slowest In 12 Months

--UK August CIPS Construction 51.1 Vs 51.9 July

--New Orders Down For Second Straight Month

By Jamie Satchithanantham

     LONDON (MNI) - UK construction activity growth lost further momentum in

August, recording the slowest pace of expansion since July 2016, with the

commercial sector hit by economic and political uncertainty, the latest

purchasing managers survey found.

     The headline IHS Markit/CIPS UK Construction Purchasing Managers' Index

reading dropped to 51.1 in August from 51.9 in July, the weakest outturn since

July 2016. Since May's 17-month high of 56.0, the PMI has slipped south, falling

for three straight months and receding a cumulative total of 4.9 points.  

     The weak August construction survey followed a slightly more upbeat August

CIPS manufacturing survey, which saw activity expand at its second-highest pace

in over three years.

     The weakening in commercial construction activity was key to the softer

overall construction performance in August, restrained only by robust housing

building work. Alongside this, a lack of new orders to replace completed

projects was also cited for the softer data.

     "Survey respondents noted that subdued business investment and concerns

about the UK economic outlook had led to a lack of new work to replace completed

projects, especially in the commercial building sector," Tim Moore, Associate

Director at IHS Markit, said.

     Civil engineering work was reported to have stagnated during the month

while commercial work dropped at the fastest pace since July 2016. According to

IHS Markit/CIPS, there was anecdotal evidence of "clients opting to delay

spending decisions and, in some cases, scale back planned projects" amid

concerns over the UK economic outlook.

     The construction sector's new order volumes fell for the second month

running in August, suggesting the summer slowdown my be prolonged into autumn,

while job creation slowed to its lowest level since last July. 

     Cost pressures, however, were reported to have weakened to the lowest level

since September.  

     "There were signs that UK construction firms are bracing for the soft patch

to continue into this autumn, with fragile business confidence contributing to

weaker trends for job creation and input buying during August," said Moore.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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