MNI: UK Construction Sector Maintains Weak Momentum In Feb

-CIPS/IHS Markit UK Construction PMI 51.4 in Feb Vs 50.2 Jan

By Jamie Satchithanantham and Jai Lakhani

     LONDON (MNI) - The UK construction sector failed to break away from its

soft growth path at the start of the year with only marginal increases in

business activity, data from the February IHS Markit/CIPS survey showed.

     The UK Construction Purchasing Managers' Index (PMI) rose 1.2 points to

51.4 in February, up from January's four-month low of 50.2. Though this was the

now the fifth consecutive monthly reading above the 50.0 no-change threshold,

February's report highlighted a second consecutive fall in new orders and just a

slight increase in business activity. 

     According to the report, there was anecdotal evidence that that fragile

business confidence and ongoing political uncertainty remained key factors

holding back client demand, while higher raw material prices, fuel bills and

staff wages also weighed on firms.  

     --COMMERICAL WORK HIGHEST SINCE MAY

     The bright spot of February's data was an uptick in commercial activity,

which expanded at the highest level since May last year. The increase in

commercial activity was the highest recorded over the past two years and was

believed to be attributed to greater industrial demand and structural changes in

consumer spending habits.  

     Civil engineering projects were the worst performers, resulting from a lack

of work to replace completed projects. Activity contracted at the fastest pace

in 5 months, while residential work remained on track for its weakest quarterly

performance since Q3 2016 after a soft patch for residential building in

February. 

     --COST PRESSURES LOWER, STILL WEIGH 

     The cost of key inputs remained dear in February. In addition to this,

survey respondents noted that increased fuel costs and greater staff wages had

pushed up operating expenses. However, the overall rate of input cost inflation

was much softer than the five-and-a-half year peak seen at the start of 2017.

     The construction PMI findings show another tough month in February and

"Despite pockets of resilience in the UK construction centre, there was little

sign of an imminent turnaround in overall growth momentum," said Tim Moore,

Associate Director at IHS Markit. 

     However, the key takeaway is that of a unpromising picture underlined by

sector optimism falling below its five year trend. 

     Duncan Brock, Director of Customer Relationships at the Chartered Institute

of Procurement & Supply, added, "the sector was feeling as a flat as a

pancake...it will take more than spring sunshine to thaw the sector's prospects

next month." 

     Friday's construction result follows the result of its manufacturing

sister-survey which, a day earlier, slipped to an eight month low. The

manufacturing PMI fell one tenth of a  point to 55.2 in February as a slower

pace of production offset a strengthening in new orders.     

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

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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