MNI DATA: UK Construction PMI Ends Year Just Below MNI Median

--CIPS/IHS Markit UK Construction PMI 52.8 in Dec vs 53.4 in Nov

By Jai Lakhani

     LONDON (MNI) - The UK CIPS/IHS Markit construction sector PMI nudged down

to 52.8 in December from 53.4 in November and below the MNI survey median of

52.9, a report published Thursday showed.

     Construction activity ended 2018 in subdued fashion with business activity

easing to a three month low. The reading of 52.8 was also the lowest since

September. However, it was the ninth month in a row the headline index remained

above the neutral 50 mark.

     Against the backdrop of Brexit uncertainty, business optimism towards the

year ahead still managed to pick up in December. The degree of confidence was

the highest since last April and significantly above the near six-year low

witnessed in October. Anecdotal evidence pointed to hopes of growth from work on

big-ticket transport and energy infrastructure projects in 2019. 

     The sector was nevertheless impacted by Brexit related uncertainty as

subdued demand appeared to explain the majority of the softer output growth in

December. This led to a slowdown in commercial building which was the worst

performing category, with activity expanding at the slowest rate since last May.

     "An expected boost from transport and energy underpinned a rise in business

optimism to an eight-month high in December... However, levels of optimism

remained subdued in relation to those recorded by the survey over much of the

past six years, reflecting concerns that Brexit uncertainty will continue to

encourage delays with decision-making, especially on commercial projects," said

Tim Moore, Economics Associate Director at IHS Markit.   

     --HIRING HOLDS UP BUT DOES MODERATE

     Total new business volumes were up for the seventh consecutive month, but

the rate of expansion calmed from November and remained modest. Survey

respondents noted "heightened political uncertainty" as a factor which

encouraged delays to spending decisions among clients. 

     As a result of these factors, there was a rise in employment numbers across

the sector as a whole but they did edge down from November's almost three year

high. A positive sign was the fact that delivery times for materials lengthened

by the last amount for over two years. Furthermore, input cost inflation was the

second-lowest since July 2016. This was in spite of a weak pound pushing up

prices for imported items. 

     --NEW YEAR, SAME UNCERTAINTY BUT SECTOR FIGHTS TO KEEP HEAD ABOVE WATER 

     "With a slight rise in new orders and a softening in overall activity

growth, firms continue to be impacted by Brexit-related uncertainty and

reluctance by clients to place orders especially for commercial projects," said

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.

     "Through all this, construction firms remained resilient as optimism for

the future rose to an eight-month high. This muted end to the year could not

dampen hope completely as construction kept it head just above water waiting for

political resolutions to the Brexit crisis and a clear path ahead," he added. 

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

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