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UK construction output slows due to rising import costs

  • 6 Feb 2017

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UK construction experienced “a subdued start to 2017”, as output suffered its weakest growth in January since the EU referendum, according to the latest UK Markit/CIPS construction PMI.

The Markit/CIPS Construction purchasing managers’ index (PMI) dropped from 54.2 in December to 52.2 last month (vs 53.8 expected), as housing, commercial and civil engineering all lost momentum.

Housebuilding stayed the best performing category, but its output was the weakest since September.

The downfall has been attributed to continuing cost pressures, from the collapse in the value of sterling, which has seen the biggest rise in purchasing costs since August 2008.

Positive outlook

Despite the rising cost of imported materials, outlook for the year ahead remains positive. The latest Markit/CIPS survey recorded strong hiring activity, with employment numbers growing at the fastest rate since May 2016, whilst subcontractor usage increased at its steepest pace since December 2015, with a strong pipeline of new projects planned over the coming months.

The promise of an increased investment in innovation and infrastructure will have caused further optimism for the year ahead.

One comment on “UK construction output slows due to rising import costs

  • Comment from JLL and Glenigan on Q4 2016 slowdown in new build activity in UK commercial construction.
    Helen Gough from Building Consultancy, Cost Management and Project Management at JLL said that the latest figures reveal a slowdown primarily in the level of new build activity with more limited change to refurbishments. This is somewhat at odds with the latest Markit/CIPS construction purchasing managers’ index which signalled an upturn in new work.
    Allan Wilén, economics director at Glenigan said that at a sector level, activity in the hotels sector has continued to expand and aspects of alternative sectors – notably healthcare – have continued their upward trajectory.

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