February records strong construction performance

Construction companies performed well in February, despite output and new business growth easing since the previous month.
That’s according to the latest Markit/CIPS UK Construction Purchasing Managers’ Index The Index posted 62.6 in February, down from a 77-month high of 64.6 in January. It has been above the 50.0 no-change level for 10 consecutive months.

The slight slide in activity is likely to be down to disruptions related to adverse weather conditions especially house building activity.

Job creation meanwhile hit a three-month high and firms remained highly positive about their expectations for business activity over the year ahead. Residential construction increased sharply in February, but at the slowest pace for four months.

Growth of commercial activity also eased , and was the least marked since November 2013.

February’s data also showed a sharp rise in new work received by construction companies, although the pace of expansion eased to the slowest for four months.

Around six times as many construction companies (59%) expect a rise in output over the year ahead as those that forecast a reduction (10%).

Survey respondents also said that supply chain pressures had contributed to higher cost burdens, with the overall rate of input price inflation accelerating from the five-month low recorded in January.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI®said: “Construction output growth succumbed somewhat to the recent wet weather, with temporary disruptions from heavy rainfall most acute for house building activity in February. Consequently, residential work ceded its place as the best performing category to civil engineering, as construction work related to flood relief and infrastructure maintenance rose sharply over the month.

“While some froth has come off overall construction growth in February, the latest data showed that job creation picked up to a pace rarely seen since the summer of 2007. Moreover, in the latest survey there were six construction companies

forecasting higher activity over the year ahead for every one anticipating a reduction.

“As a result, there appears an undiminished depth of belief among construction companies that strong growth will be sustained this year, helped by more

favourable economic conditions and an ongoing house building recovery.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “Bad weather took a bite out of progress in house building, but UK construction remains on a strong growth trajectory in February.

“The sector was fuelled by the strongest rise in civil engineering activity in the

survey’s history, as an increase in spending was recorded on investment and infrastructure projects in response to recent flooding. Even though both

housing and commercial activity suffered a slide in pace of growth in February, the overall performance was one of continued expansion.

“While delivery times are still deteriorating, they are at least doing so at the slowest rate since August 2013, suggesting that the very worst of the squeeze has passed.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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