MNI: UK Aug Construction PMI Dip Masks Underlying Resilience

-CIPS/IHS Markit UK Construction PMI 52.9 in Aug vs 55.8 in Jul

By Jai Lakhani

     LONDON (MNI) - The UK construction sector PMI dropped to 52.9 in August

from 55.8 in July, but remains comfortably above the 50.0 expansion/contraction

threshold.

     All three of the survey's major categories lost momentum from July.

However, it pointed to resilience in underlying workloads and a solid upturn in

new business. Employment growth held close to July's 30-month peak.

     Rising demand kept supply chain capacity stretched during August, resulting

in vendor lead times lengthening to the greatest extent since March 2015. Low

stock and labour shortages also led to longer delivery times.

     Commercial building was the best performing sub-sector in terms of output,

with residential work following closely. Housing activity growth, however, was

at its weakest since March, while civil engineering projects decreased for the

first time in five months, due to a reported lack of new work on infrastructure

projects.

     Anecdotal evidence pointed to buoyant client demand and supportive economic

conditions, but also suggested that Brexit-related uncertainty continued to hold

back investment spending.

     Overall though, an eleventh straight increase in purchasing activity,

albeit at the weakest rate since March, pointed to underlying resilience.

     Companies are optimistic that business activity will expand over the coming

12 months, although Brexit concerns are containing positive sentiment.

     --COST PRESSURES DOWN

     Despite stretched supply chains and higher energy costs, input price

inflation edged down to its lowest since July 2016.

     -- "ENCOURAGING" SIGNS

     While the headline August construction PMI paints a less positive picture

than in July, the components of the index offer hope for stronger activity going

forward. Tim Moore, Associate Director at IHS Markit said: "The construction

sector slipped back into a slower growth phase in August, with this summer's

catch-up effect starting to unwind after projects were delayed by adverse

weather at the start of 2018 ... There are some encouraging takeaways from the

latest survey, especially the resilient degree of new business growth in August

and a strong upturn in staff recruitment. Survey respondents noted that they are

confident about achieving organic growth at their businesses in the coming 12

months."

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

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

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

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