Commercial construction sees moderate fall

UK construction companies reported an uneven recovery in business activity at the end of 2017, according to the latest analysis.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) was 52.2 in December – down from the 53.1 recorded in November – but above the 50.0 no-change threshold for the third consecutive month.

A healthy rise in residential building contrasted with a decline in work on commercial projects and stagnating civil engineering output.

The sector saw positive signals for the near-term business outlook, with new order growth hitting a seven-month high and job creation the largest since June.

However, intense supply-chain pressures continued across the construction sector, while input cost inflation picked up from November’s 14-month low.

Respondents indicated that housebuilding remained a key engine of growth, with residential work increasing for the 16th consecutive month in December.

By contrast, the latest data revealed a moderate fall in commercial construction, continuing the downward trend seen since July.

Tim Moore, associate director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, said: “The UK construction sector achieved a moderate expansion of business activity at the end of 2017, although the recovery remained uneven

and slowed overall since November.

“Construction companies indicated that another strong contribution from housebuilding helped to offset subdued civil engineering activity and reduced volumes of commercial work.

“Total new orders picked up at the fastest pace for seven months in December, which provides a positive signal for construction workloads in the short term.

“Resilient demand and forthcoming project starts also led to greater job creation and the strongest increase in input buying for two years.”

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