MNI: UK Sep Construction PMI Dips To Six Month Low

--CIPS/IHS Markit UK Construction PMI 52.1 in Sep vs 52.9 in Aug

By Jai Lakhani

     LONDON (MNI) - The UK CIPS/IHS Markit construction sector PMI dropped to

52.1 in September, down from 52.9 in August and below the MNI median of 52.7.

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

However, the survey pointed to strong increases in net work and employment. This

contrasted business optimism being at the second-lowest level since February

2013 with a number of firms citing subdued economic confidence in 2018 remaining

a factor holding back business activity growth. 

     Civil engineering was the worst performing sub-category of construction

work as activity declined at a faster rate than in August. Whilst house building

and commercial construction continued to increase, the latest survey data

indicated weaker growth than in August. 

     Against the trend observed for construction output which shows an

unflattering picture for current demand, the data eludes to a faster rise in new

business volumes, with the rate of new order growth at its strongest since

December 2016. Anecdotal evidence points to resilient demand and an upturn in

new invitations to tender as reasons for this growth. 

     Rising demand and an improvement in the new order books helped facilitate a

robust rise in staffing numbers, with the latest increase in employment the

fastest seen since December 2015. With a larger than usual intake of trainees

and apprentices, some reports pointed to firms responding to tight labour market

conditions with a strategic focus on long-term hiring policies. 

     --COST PRESSURES BACK UP

     Rising demand for inputs meant a sharp acceleration in increases for

average cost burdens. The overall rate of input price inflation was the fastest

for three months, stemming from higher fuel prices and increasing raw material

costs (particularly timber). 

     -- FUTURE LOOKS GLOOMY

     The headline September construction PMI points to the sector losing

momentum across the board. Whilst the picture for September was fairly mixed,

the future appears rather bleak. "Construction companies continued to note that

political uncertainty acted as a key drag on decision-making, with Brexit

worries encouraging a wait-and-see approach to spending among clients," said Tim

Moore, Associate Director at IHS Markit.

--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

[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]