Apr 4, 2016 - upturn in overall business activity during March, but the pace of expansion .... For economics comments, d
News Release Purchasing Managers’ Index® MARKET SENSITIVE INFORMATION th
EMBARGOED UNTIL: 09:30 (London) / 08:30 (UTC) April 4 2016
Markit/CIPS UK Construction PMI® Residential activity expands at slowest pace for over three years Key points:
Overall output growth unchanged from February’s ten-month low
Residential slowdown offsets rebound in civil engineering and commercial work
New business growth and job creation weaken in March
Markit/CIPS UK Construction PMI
®
Slower growth of incoming new work continued to act as a brake on construction output in March. Reports from survey respondents cited a generally supportive economic backdrop, but some noted that greater uncertainty about the business outlook had resulted in more cautious spending patterns among clients. Reflecting this, latest data signalled the weakest rise in new work received across the construction sector since the pre-election slowdown in April 2015.
Source: Markit/CIPS
UK construction companies indicated a sustained upturn in overall business activity during March, but the pace of expansion remained relatively subdued in comparison to the trends seen for much of the past three years. This largely reflected a further moderation in new business growth, with the latest increase the weakest since April 2015. Meanwhile, job creation also softened across the construction sector in March and sub-contractor usage dropped for the second month running. At 54.2 in March, the seasonally adjusted Markit/CIPS UK Construction Purchasing ® ® Managers’ Index (PMI ) posted above the neutral
Page 1 of 3
50.0 value for the thirty-fifth month running. However, the latest reading was unchanged since February and indicated the joint-slowest rate of output growth since June 2013. Sub-sector data highlighted that faster rises in commercial work and civil engineering activity were offset by another slowdown in residential building. The latest increase in housing activity was only marginal and the weakest recorded since January 2013.
March data highlighted greater caution among construction companies in terms of their staff hiring, with the rate of employment growth easing to its slowest since June 2013. At the same time, subcontractor usage decreased at a slightly steeper pace than in February, which contributed to the least marked rise in sub-contractor charges for just over two-and-a-half years. A softer upturn in overall workloads across the construction sector led to another slowdown in input buying growth. Moreover, the latest increase in purchasing activity was the weakest since April 2015. Suppliers’ delivery times lengthened again in March, but input cost inflation moderated for the second month running to its weakest since February 2010. Looking ahead, the majority of survey respondents (51%) expect a rise in business activity at their units over the next 12 months, while only 11% forecast a reduction. While this signalled that UK construction
© Markit
companies remain optimistic about their prospects for growth, the overall degree of confidence was the joint-lowest since December 2014. ®
UK Construction PMI by Category of Activity
Source: Markit/CIPS
Comment: Tim Moore, Senior Economist at Markit and ® author of the Markit/CIPS Construction PMI , said: “March’s survey confirms that the UK construction sector is experiencing its weakest growth phase since the summer of 2013. Residential building has seen the greatest loss of momentum through the first quarter of 2016, which is a surprising reversal of fortunes given strong market fundamentals and its clear outperformance over the past three years.
Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “There was little comfort to be had this month, as the construction sector was awash with caution and hesitancy not seen since the pre-election lull of 2015. Clients were unwilling to commit to new contracts or expand existing work, meaning that new business growth was at its most fragile since April 2015.
“Construction firms were reliant on a rebound in commercial building and resurgent civil engineering growth to offset the slowdown in housing activity. Civil engineering delivered its strongest performance for just over a year, suggesting that a healthy pipeline of infrastructure projects continues to boost construction output.
“Where the housing sector was once the star of the show, it became the weakest performer in March. And hopes for more positive employment news were dashed, as the rate of growth in staffing levels slowed to a pace last seen in June 2013; and amidst a landscape of continuing skills shortages after the end of the recession.
“However, heightened uncertainty about the business outlook appears to have weighed on overall construction demand so far in 2016, with survey respondents citing cautious client spending patterns and a reduced willingness to commit to new projects.
“Though activity and new work slowed, construction firms enjoyed the slowest rate of cost increases for just over six years, largely due to ongoing falls in commodity prices. There was evidently a loss of momentum in the sector, though cautious optimism was sustained as a result of encouraging domestic economic conditions, but against a background of some political uncertainty.”
“As a result, volumes of new work disappointed in March as order book growth slipped for the third month in a row and reached its weakest since the pre-election blip last year.”
Page 2 of 3
– Ends –
© Markit
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 118,000 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
®
The intellectual property rights to the UK Construction PMI provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. CIPS use the above marks under license. Markit is a registered trade mark of Markit Group Limited.
Page 3 of 3
© Markit
