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-CIPS/IHS Markit UK Construction PMI 47.0 in March Vs 51.4 Feb
By Jamie Satchithanantham and Jai Lakhani
LONDON (MNI) - The UK construction sector not only failed to break away
from its soft growth path so far this year but declined to below the 50.0 no
change threshold for the first time in six months, data from the March IHS
Markit/CIPS survey showed.
The UK Construction Purchasing Managers' Index (PMI) fell sharply from 51.4
in February to 47.0 in March with the report highlighting the bad weather last
month, which contributed to a fall in business activity.
According to the report, the overall reduction in construction output was
driven by the sharpest drop in civil engineering work for five years in March
adding to the problems it faced in February.
Commercial activity also declined in March with the rate of the decline the
most marked since September 2017. Housing bucked the wider trend for
construction activity in March but the upturn in residential building was
marginal at best.
The report also cited anecdotal evidence that the decline in new business
volumes was attributed by respondents to subdued underlying demand and, in some
cases, weather-related disruptions weighing on sales in March.
This was combined with the continuation of higher raw material costs
weighing on firms as well as sub-contractor availability declining, leading to
the strongest rise in average prices charged since September 2017.
--COST PRESSURES LOWER, STILL WEIGH
The cost of key inputs remained relatively expensive in March despite the
overall rate of input cost inflation softening to a 20-year low. In addition to
this, survey respondents noted a moderation in supplier prices linked to the
weak pound and that greater staff wages had pushed up operating expenses.
-- WEATHER AFFECTED MARCH BUT SECTOR'S POTENTIAL STILL LOOKS QUESTIONABLE
The construction PMI findings show a tough month in March where "Total
construction output fell at the fastest pace since July 2016, driven by the
sharpest reduction in civil engineering activity for five years and a renewed
fall in commercial work." said Tim Moore, Associate Director at IHS Markit.
He added that the reason for the subdued business conditions in March was
due to snow-related disruption.
Whilst construction saw a solid rise in employment numbers and a rebound in
business expectations to a nine-month high, the survey respondents also noted
"that underlying demand remains constrained by heightened economic uncertainty
and risk aversion among clients."
Duncan Brock, Director of Customer Relationships at the Chartered Institute
of Procurement & Supply, added, "It's a few years since the UK experienced such
bad weather in March and it's obvious that supply chains were woefully
unprepared to deal with the disruption. So though March's figures could be
viewed as a temporary blip, without a strong pipeline of work, and strong risk
strategies in place, the sector's health remains in question."
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