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Construction output growth slowed in April

According to the latest Markit/CIPS UK Construction PMI, UK construction companies saw output growth slow in April amid the weakest rise in new work since June 2013.

A number of respondents suggested that uncertainty related to the forthcoming general election had contributed to delays in clients’ spending decisions.

However, construction sector job creation remained robust in April and there were widespread reports of worsening capacity pressures. This contributed to another drop in sub-contractor availability and a corresponding increase in sub-contractor pay rates, with the latest rise the fastest since the survey began in April 1997.

Residential building activity was the best performing broad area of construction output during April, although even in this category the pace of expansion slipped to a 22-month low. Meanwhile, growth of commercial construction work was the least marked since August 2013.

A key factor weighing on overall construction output growth was weaker new business gains in April. Reports from survey respondents suggested that underlying conditions remained favourable, especially in the house building sector, but some clients had delayed spending decisions ahead of the general election.

Looking ahead to the next 12 months, business confidence dipped from the nine-year high seen in March, but remained stronger than its long-run average.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: 'April’s survey highlights another growth slowdown across the UK construction sector, with new work expanding at the weakest pace for almost two years.'

He added: 'Despite experiencing pre-election risk aversion among clients in April, construction companies indicated a strong degree of confidence regarding the year-ahead outlook. As a result, job hiring was robust and little-changed since March, placing further pressure on skilled staff availability.

'Taken as a whole, the latest survey presents a far more upbeat picture than the curiously weak official construction output data for the first quarter of 2015.

David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply (CIPS), said: 'The General Election has given the sector pause for thought as procurement and supply management professionals reported a slowdown in the pace of new construction orders growth. Though the index still remains in positive terrain, this deceleration has been attributed to project delays and hesitancy as the country prepares to vote.'

 

 

 

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