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Free AccessMNI: UK June Construction Sector Activity Up from May
-CIPS/IHS Markit UK Construction PMI 53.1 in June vs 52.5 in May
By Jai Lakhani
LONDON (MNI) - The UK construction sector PMI rose to 53.1 in June from
52.5 in May, indicating the fastest pace of construction output growth since
November 2017.
The report details revealed that the overall output expansion was
underpinned by strong growth in residential work and commercial building, the
latter of which expanded at its fastest pace since February. Whilst residential
work remained the best performing area of activity, civil engineering activity
continued to stutter, with the rate of growth easing to a three-month low.
Positively, survey respondents noted a general improvement in client
demand, which helped to boost construction workloads in June. As a result of
this, the rate of new business growth was the strongest for just over one year
in June.
As a knock-on effect from new business growth, there were faster increases
in employment numbers and purchasing activity during June. The pace of job
creation was its strongest for one year. Meanwhile, the rise in input buying was
the steepest since December, partly due to new projects but also to lock in
lower input prices in expectation of forthcoming rises.
The overall outlook for near-term growth in the construction sector looks
bright, especially given the strongest rise in new orders since May 2017 and the
largest upturn in input buying for two-and-a-half years.
Unsurprisingly, these encouraging developments supported a rebound in
business optimism in June from May's seven-month low, although it is worth
noting that the degree of positive sentiment is still below the long-run survey
average.
--COST PRESSURES UP
The latest increase in input prices was the steepest for nine months,
attributed to greater transportation costs and higher prices for metals, most
notably steel. Furthermore, vendor lead times lengthened further due to low
stocks and capacity constraints among suppliers.
--SECTOR'S "BRAKES ARE OFF"
The June PMI suggests a slightly rosier picture than the one outlined in
May. As Tim Moore, Associate Director at IHS Markit points out: "The latest
increase in UK construction output marks three months of sustained recovery from
the snow-related disruption seen back in March."
Duncan Brock, Director of Customer Relationships at the Chartered Institute
of Procurement & Supply, added: "With the fastest rise in new orders since May
2017, it appears the brakes are off for the construction sector. Despite being
hampered by economic uncertainty, firms reported an improved pipeline of work as
clients committed to projects and hesitancy was swept away."
However, Brock cautioned that: "A cloud of uncertainty remains, given the
sector's hit and miss performance so far this year and lower than average
business confidence in June."
--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com
--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]
To read the full story
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Please enter your details below.
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.