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Construction Activity Momentum Eased in January

January's PMI of 50.6 is the lowest reading since March 2018; residential construction recorded modest growth

Construction activity in the UK slowed to its lowest rate since the slowdown in March due to adverse weather conditions

The UK’s construction industry reported its tenth straight month of expansion, the latest Purchasing Managers’ Index (PMI) by IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) reveals.

Despite staying above the 50.0 no-change reading since the decline brought on by weather-related disruptions in March 2018, January’s level of 50.6 is a notable drop on the 52.8 recorded in the previous month and the lowest over the 10-month period.

Commercial construction activity reported the weakest performance in the month, with commercial projects declining for the first time since March, whilst residential work had the strongest performance, albeit it with more moderate expansion than in recent months.

New business activity softened in January to an eight-month low, as demand slowed and conversion times rose, suggesting clients are delaying their spending decisions.

Construction employment, which had consistently posted strong growth despite the difficulties from Brexit, also saw a sharp slowdown, with the January data showing the slowest increase in employment figures since the referendum in June 2016.

Overall optimism for future construction activity moderated in January but remained broadly stable, with 41% of those surveyed forecasting higher outputs and just 16% anticipating work will fall.

“UK construction growth shifted down a gear at the start of 2019, with weaker conditions signalled across all three main categories of activity,” said Tim Moore, Economics Associate Director at HIS Markit.

“Commercial work declined for the first time in ten months as concerns about the domestic economic outlook continued to hold back activity. The latest survey also revealed a loss of momentum for house building and civil engineering, although these areas of the construction sector at least remained on a modest growth path.”

Workloads for SME construction firms lifted at the end of last year, according to the Federation of Master Builders’ final State of Trade Survey for 2018.

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