Business activity in UK construction continued to grow last month but at a slower pace than in February. At 57.8, the headline index was down from 60.1 in mid-quarter and at its lowest level in three months. Nonetheless, the indications are that the sector enjoyed another good month and should have made a useful contribution to a probable healthy increase in real GDP in the first quarter.
All three major areas posted some loss of momentum but housing remained the best performing subsector ahead of commercial. Civil engineering was the weakest category and activity rates here fell relatively sharply. That said, companies in general continued to report higher new orders despite indications that uncertainty about the upcoming general election might be dampening would-be demand. To this end, another increase in overall employment was the smallest since December 2013.
Despite March's slowdown, year-ahead output expectations climbed to their highest level since February 2006 and sub-contractor availability continued to fall sharply. As a result, sub-contractor charges posted their steepest gain since the survey began in April 1997.
Some deceleration in construction activity from the unusually high levels of 2014 was almost inevitable, particularly with a general election looming. However, in general the sector remains on a solid growth trajectory and, if own-industry expectations are anything to go by, looks set to pick-up renewed momentum once May's poll is out of the way.
The Markit/CIPS UK Construction PMI 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. Unlike other PMIs, this PMI focuses on one industry, namely UK construction.
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. 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 pre-dates official government statistics by many months.
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