Construction output growth slows for third straight month

Construction output growth slows for third straight month

Latest PMI survey shows civil engineering activity has fallen for first time since 2013

Growth in the construction sector continued to slow in December, weighed down by a decline in civil engineering work, data from Markit/CIPS published today reveals.

The Markit/CIPS purchasing managers index, which measures the rate of increase or decrease in the activity of purchasing managers, fell to a score of 57.6 in December down from 59.4 in November. The score marks the weakest rate of increase in construction output for 17 months.

While the index remained firmly above the 50-point mark, which separates overall growth from contraction, the survey highlighted "divergent trends" between three broad categories of construction output.

December's data showed house-building to be the strongest performing sub-category, although the pace of expansion moderated to its least marked since June 2013, while commercial construction increased at a solid pace.

The decrease in civil-engineering activity, meanwhile, ended a 17-month run of continuous expansion.

Markit/CIPS said anecdotal evidence pointed to strong demand for new residential development and a continued recovery in tenders for commercial projects.

The survey recorded a rise in staff recruitment in the final weeks of the year, although less marked than in November.

A number of firms highlighted worsening skill shortages across the construction sector.

Sub-contractor availability decreased at a "sharp and accelerated pace" in December, while sub-contractor pay increased at the second-fastest pace since the survey began in April 1997, exceeded only by November's record high.

Tim Moore, senior economist at Markit, said survey data showed 52 per cent of companies anticipated an upturn in output in 2015, four times as many as the proportion predicting a reduction.

"Positive sentiment was linked to strong pipelines of work-in-hand and favourable underlying business conditions," he said.

"However, concerns related to supply chain pressures and deepening skill shortages were prevalent among survey respondents in December."


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