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Free AccessMNI: UK Apr Construction Sector Surpasses Analyst Expectations
-CIPS/IHS Markit UK Construction PMI 52.5 in April Vs 47.0 March
By Jai Lakhani
LONDON (MNI) - The UK construction sector recovered in April from March's
decline below the 50.0 'no change' threshold, which was the first time it fell
below that mark in six months, data from the March IHS Markit/CIPS survey
showed.
The UK Construction Purchasing Managers' Index (PMI) climbed back to 52.5
in April from 47.0 in March, with the report highlighting a house building
recovery driving the rebound. The April reading represents the highest since
November 2017 and was well above the MNI median of analysts estimates of 50.5.
According to the report, house building was the main category to experience
robust growth in April, with residential growth reaching its strongest rate of
growth since May 2017. Weather-related improvements were also seen for
commercial building and civil engineering activity.
There was also evidence of a renewed rise in new order volumes across the
construction sector, albeit marginal. Anecdotal evidence cited contrarily to the
positive data, heightened economic uncertainty and subdued confidence amongst
clients in April. Consequently, the evidence noted that, in some cases,
construction firms noted a knock-on impact from unusually bad weather previously
contributing to delays with sales completions during the April survey period.
However, the survey data also revealed optimism amongst construction firms
who are relatively upbeat about the 12-month business outlook, with the degree
of confidence the strongest recorded since May 2017. Furthermore, employment
number increased for the twenty-first month running in April despite relatively
weak new business growth.
--COST PRESSURES LOWER
Input cost inflation was unchanged from its 20-month low seen in March,
with survey respondents pointing towards higher fuel costs and steel-related
input prices pushing up operating expenses in April. The supply chain pressures
remained marked in April, with low stocks and shortage of transport capacity
increasing delivery times for construction materials.
-- APRIL'S RECOVERY STILL MODEST AT BEST
The construction PMI findings show a weak comeback in April where "the
recovery from March's low point is somewhat underwhelming and provides an
indication that the construction sector has been treading water at the very best
in recent months." said Tim Moore, Associate Director at IHS Markit.
He added that the reason for the rebound was inevitable after the snowfall
resulting in severe disruptions on site during March.
Duncan Brock, Director of Customer Relationships at the Chartered Institute
of Procurement & Supply, added, "April's data provides some relief after last
month's weather disruption, especially for the housing sector after a lacklustre
few months. However, economic uncertainty and Brexit-related indecision
continues to lurk beneath the surface as obstacles to the construction sector's
stability... What the sector needs now is more widespread client confidence and
big ticket projects to follow suit."
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.