MNI: 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

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