Dec 2, 2015 - business and employment all rising at slower rates than in the previous .... For economics comments, data
News Release Purchasing Managers’ Index® MARKET SENSITIVE INFORMATION nd
EMBARGOED UNTIL: 0930 (London / UTC) December 2
2015
Markit/CIPS UK Construction PMI® Construction output growth slows in November amid weakest rise in housing activity since June 2013 Key points:
Slowest rise in UK construction output since April
Commercial building replaces housing as the best performing area of activity
Jobs growth eases to its slowest since September 2013
Markit/CIPS UK Construction PMI
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Construction companies mainly commented on supportive economic conditions and rising workloads at their units. However, there were some reports from survey respondents that cited a lack of new work to replace completed projects in November, which in turn acted as a drag on business activity growth. Reflecting this, latest data indicated a weaker rise in overall new business volumes. In some cases, construction firms suggested that more cautious spending patterns among clients had weighed on new order inflows.
Source: Markit/CIPS
Growth momentum softened across the UK construction sector in November, with output, new business and employment all rising at slower rates than in the previous month. At 55.3, the headline seasonally adjusted Markit/CIPS UK Construction ® ® Purchasing Managers’ Index (PMI ) was down from 58.8 in October and signalled the slowest expansion of business activity for seven months. Aside from the pre-election slowdown seen in April, overall output growth was the weakest since mid2013.
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All three broad areas of construction activity experienced a slowdown in output growth during November. Residential building activity increased at the weakest pace since June 2013, while civil engineering activity rose at the slowest rate for six months and was the worst performing subcategory. Commercial construction activity topped the growth table, but the latest expansion was less marked than October’s eight-month high.
Slower growth patterns across the construction sector contributed to a moderation in job creation from the 11-month high recorded during October. Although still strong in a historical context, the latest rise in staffing levels was the weakest September 2013. Sub-contractor usage continued to rise at a solid pace in November, but their average charges increased at the least marked pace for almost two years. In line with the trends for output and new work, latest data highlighted a slowdown in input buying growth across the construction sector. Supplier performance continued to deteriorate in November, which survey respondents linked to stock shortages and pressure on capacity. That said, the latest lengthening of delivery times was modest in comparison to those seen on average so far this
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year. At the same time, input price inflation moderated in November and was well below the long-run survey average. Construction firms noted that lower prices for some raw materials (particularly metals) had partially offset rising labour costs.
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UK Construction PMI by Category of Activity
Meanwhile, survey respondents remain highly upbeat about the business outlook, with over half (55%) forecasting a rise in output over the year ahead and only 5% expecting a fall. The degree of positive sentiment was down only slightly since October and still well above the post-crisis average.
Source: Markit/CIPS
Comment: Tim Moore, Senior Economist at Markit and ® author of the Markit/CIPS Construction PMI , said: “The UK construction recovery is down but not out, according to November’s survey data. Aside from a pre-election growth slowdown in April, the latest expansion of construction activity was the weakest for almost two-and-a-half years amid a sharp loss of housebuilding momentum. “Residential activity lost its position as the best performing sub-category, but a supportive policy backdrop should help prevent longer-term malaise. Strong growth of commercial construction was maintained in November as positive UK economic conditions acted as a boost to new projects, while civil engineering remained the weakest performer. “Overall the latest results suggest that construction companies have become a little more cautious towards year-end, especially in terms of job hiring. However, a healthy flow of new tenders from public and private sector clients is expected to provide a tailwind to growth heading into 2016. Reflecting this, UK construction firms were again overwhelmingly positive about the outlook for their business activity, while only a small proportion anticipates falling output levels during the next 12 months.”
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Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “Suppliers continued to struggle this month, citing shortages in key materials, supply chain capacity and skilled capability as the causes. But there is a question mark over the coming months as the housing sector, normally the star performer, may drag back on recovery along with the lack of availability of skilled staff. Many firms were forced to use more expensive contractors and, further combined with the hoped-for continued job growth failing to materialise, this may leave commentators wondering what’s next. “Though there will inevitably be some disappointment that last month’s strong activity has largely petered out, the sector still operates in a positive environment of low interest rates, low inflation and lower commodity prices which has been reflected by respondents’ continued optimism for a good future.” – Ends –
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Contact Information: For economics comments, data and technical queries, please call: Markit Press Office Joanna Vickers, Corporate Communications Telephone +44 207 260 2234 Email:
[email protected] For industry comments, please call: CIPS Trudy Salandiak Tel: +44 1780 761576 Email:
[email protected] Notes to Editors: Where appropriate, please refer to the survey as the Markit/CIPS UK Construction PMI®. The Purchasing Managers' Survey is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to GDP. The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy, being issued on the first working day of each month. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at "grass roots" level in the economy. As such the information generated on economic trends predates official government statistics by many months. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) and seasonally adjusted numbers are available to subscribers from Markit. Please contact
[email protected] About Markit Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ approximately 4,000 people in 11 countries. Markit shares are listed on NASDAQ under the symbol MRKT. For more information, please see www.markit.com About PMI Purchasing Managers’ Index® (PMI®) surveys are now available for over 30 countries and also for key regions including the Eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics. About CIPS The Chartered Institute of Procurement & Supply (CIPS) is the world’s largest procurement and supply professional organisation. It is the worldwide centre of excellence on purchasing and supply management issues. CIPS has a global community of 110,000 in 150 countries, including senior business people, high-ranking civil servants and leading academics. The activities of procurement and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability. www.cips.org
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