News

UK Construction PMI - November 2019

03-12-2019

 - Slowest decline in construction output since July

 - Output falls in all three broad categories of construction

 - Sharp drop in new work

 - Staffing levels decrease for the eighth month in a row

UK construction companies recorded another drop in business activity during November. The pace of decline moderated to its slowest since July. However, new work continued to fall sharply amid reports that domestic political uncertainty had led to indecision among clients.

The headline seasonally adjusted IHS Markit / CIPS UK Construction Total Activity Index rose to 45.3 in November, from 44.2 in October, to signal the slowest drop in overall construction output for four months. Reduced business activity was attributed to a lack of new work to replace completed contracts. In some cases, survey respondents suggested that unusually wet weather in November had also weighed on output.

All three broad areas of construction work recorded a fall in output during November, with civil engineering the worstperforming category, followed by commercial building. Meanwhile, a much slower decline in housing activity helped to moderate the overall drop in UK construction output signalled by the survey in November.

Latest data pointed to another sharp reduction in new work received across the construction sector. Lower sales volumes have now been recorded for eight consecutive months, which is the longest phase of decline since 2012-13. Survey respondents commented on subdued client confidence and ongoing hesitancy to commit to new projects, largely in response to domestic political uncertainty.

Construction companies reported a sustained decline in their staffing numbers during November. A number of firms noted that softer demand had prompted cost-cutting efforts and led to the non-replacement of voluntary leavers.

Mirroring the trend for employment, latest data revealed a solid reduction in purchasing activity across the construction sector. Weaker demand for construction products and materials allowed suppliers to catch up on their workloads in November. As a result, vendor lead-times lengthened to the smallest extent since September 2010.

Subdued demand for raw materials led to fewer price rises by suppliers in November. Moreover, latest data indicated that overall input cost inflation remained the among the lowest seen since early-2016.

Looking ahead, construction companies remain relatively cautious about their prospects for growth over the course of 2020. The degree of business optimism was little-changed since October and still much weaker than its long-run average. Reports from survey respondents suggested that this largely reflected concerns about the domestic economic outlook and worries that political uncertainty will continue to hold back client confidence.

 

Source: www.markiteconomics.com