Purchasing Managers Index Finds Wet Weather Hitting UK Construction Activity

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6th March 2014 12:26 - Construction

According to the Markit construction Purchasing Managers’ Index (PMI), UK construction softened in February as disruption from the wettest winter on record took its toll. However, with a 10th consecutive month of increasing activity the survey index remained close to a six-year high.

The Markit construction PMI, based on a survey of construction companies, on Tuesday (4/3/2014) posted 62.6 in February, from 64.6 in January – a more than six- year high. Any figure over 50 indicates expansion.

Residential construction increased sharply in February, but at the slowest pace for four months. Growth of commercial activity also eased in February, and was the least marked since November 2013. Civil engineering activity was the best performing area of construction in February, with the pace of expansion the steepest since the series began in April 1997.

February data indicated a sharp rise in new work received by construction companies, although the pace of expansion eased to the slowest in four months. Subjective evidence cited strong client demand for new projects, but there were some reports that unusually wet weather had a disruptive influence on sales during the latest survey period.

Around six times as many construction companies (59%) expect a rise in output over the year ahead as those that forecast a reduction (10%) - widespread reports that improving economic conditions and greater innovations to tender had supported optimism about future business activity.

Michael Conroy Harris, construction expert at law firm Eversheds, said

“Whenever the weather is described as the worst since records began it follows that the construction industry will be significantly impacted…  There’s no doubt that the flooding will have a short to midterm impact on the industry, but is it necessarily a bad thing? The recovery in the industry has been a long time coming and all the more welcome for that but the last thing we need now is overheating”.

David Tinsley, UK Economist at BNP Paribas, said:

“The pace of expansion in the sector is stretching resources. The employment index rose above 60, indicating strong growth in jobs. Rates charged by subcontractors also picked up, as their availability fell for the eighth month in a row”.

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