The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) posted 52.9 for the month, down from July's 14-month peak of 55.8 but above the 50.0 no change mark.
Despite all three broad categories of activity slowing down, there were signs of resilience in terms of underlying workloads, with the latest survey signalling another solid upturn in new business.
Commercial building was the best performing area of construction output in August, followed closely by residential work. However, the latest expansion of housing activity was the weakest since March. Meanwhile, work on civil engineering projects decreased for the first time in five months, with a number of survey respondents citing a lack of new work on infrastructure projects.
Elsewhere, data revealed a slowdown in new business growth from July's 14-month peak. Anecdotal evidence cited resilient client demand and supportive economic conditions, but there were also reports that Brexit-related uncertainty continued to hold back investment spending. Meanwhile, higher overall workloads encouraged additional staff recruitment across the construction sector in August, with respondents noting tight labour market conditions and shortages of suitably skilled candidates to fill vacancies.
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Purchasing activity increased for the eleventh consecutive month in August, although the latest upturn was the weakest since March. Low stock and labour shortages among suppliers continued to impact on delivery times for construction products and materials. This latest deterioration in supplier performance was the greatest seen for almost three- and-a-half years. Despite stretched supply chains and rising energy-related costs, latest data indicated that input price inflation edged down to its lowest since July 2016.
Looking towards the future, companies are optimistic that business activity will expand over the coming 12 months, but the degree of confidence eased to its weakest since May. Survey respondents cited confidence about achieving organic growth through new project wins and geographical diversification, while Brexit uncertainty remained the main factor cited as holding back sentiment.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: "The sector is hovering too close for comfort to the no change mark which makes it a contender for more disappointment next month.
"Though the path to Brexit is paved with good intentions, without significant progress the sector will soon be building castles in the air rather than on solid ground."
Mark Robinson, Scape Group Chief Executive, said: "The construction sector remained resilient in August, and it is particularly pleasing to see the companies remain optimistic that business activity will continue to expand over the next year, despite the Brexit clamour.
"Infrastructure investment remains absolutely vital. Successfully delivering Crossrail and HS2 is important for the long-term economic health of the country, but there are also many hundreds of smaller projects which could have a big impact on regional economies right now that the Government and Local Enterprise Partnerships (LEPs) can press ahead with to boost growth across the UK.
"The next couple of months may be fraught with uncertainty around Brexit, but we must not forget that the UK still needs to keep building to provide new schools, homes, health centres, libraries, and other community services which meet the needs of our rapidly increasing population. The Government can help to alleviate the impact of Brexit on the construction sector and the economy by ensuring a strong pipeline of investment in these projects."
(LM/CM)
