The latest IHS Markit/CIPS UK Construction Purchasing Managers' Index® (PMI®) was recorded at 52.5 in May, unchanged since April and indicative of moderate increase in total activity.
With the pace of expansion matching that compared with the previous month, commercial activity growth accelerated to a three- month high in May, with the sector being the only category to record a faster rate of expansion than in April.
Softer expansions were recorded in both residential and civil engineering activity, with residential remaining the strongest of the three monitored sub-sectors for the third month running during May. The pace of expansion eased from April's 11-month high, which had seen house building activity rebound from heavy snow in March.
However, new order books contracted for the fourth time in the past five months amid general uncertainty in the sector, with respondents blaming political and economic uncertainty, subdued retail sector conditions and fragile business confidence as key causes of weaker demand. However, the rate of contraction was only fractional and slower than the declines seen throughout the first quarter.
-- Advertisement --
Elsewhere, optimism towards future growth prospects slumped to a seven-month low in May. The drop in confidence was linked to fears of political and economic uncertainty and an expected slowdown in the construction sector. Alongside easing positive sentiment, job creation softened to a four-month low in the latest survey period, with surveyed companies continuing to report a shortage of skilled staff availability.
Purchasing costs faced by construction firms also rose sharply in May, while the rate of input price inflation was the steepest registered since February. Panel members commonly reported elevated fuel costs, alongside higher plastic and steel-related input prices.
Supplier delivery times continued to worsen in the latest survey, though the degree of deterioration was one of the weakest over the past year-and-a-half. Where longer times were reported, businesses frequently blamed shortages of materials at vendors.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: "The two millstones of uncertainty and weak economic growth gave the sector plenty to worry about this month, and whilst activity still grew, the lowest business confidence in seven months suggests the subdued pipeline of new work is having an effect. With a decline in new orders for a fourth time in five months, it was client hesitation and consumer diffidence towards spending that had construction activity stuttering.
"Higher prices for fuel, raw material shortages, higher labour costs combined with slow delivery times were further obstacles to growth as firms nervously assessed their workforce for much-needed talent and sub-contractors could name their price.
"However, it's encouraging to see the housing sector put in a strong performance for a second month running, after stumbling at the beginning of the year, and with only small improvements in the other sectors, residential building is keeping construction's head above water.
"It's likely that the construction sector's performance will be a slow and steady crawl through the second quarter, as the spectre of Brexit continues to dominate, and the double pincer movement of few orders, and higher costs, could see the sector stutter further."
(LM)
