GB: PMI Construction

Tue May 05 03:30:00 CDT 2015

Consensus Actual Previous
Level 57.4 54.2 57.8

Business activity in UK construction slowed unexpectedly quickly last month. At 54.2 the sector PMI was 3.6 points short of its March outturn and at its weakest level since June 2013. However, the April print was still well above the 50 growth mark and its decline was probably at least in part due to supply shortages.

Hence, job creation remained robust and there were widespread reports of issues with capacity utilisation. Accordingly, sub-contractor availability fell again, pay rates hit a new survey high and supplier lead times continued to lengthen.

Residential continued to be the best performing subsector although even here activity rates dropped to a 22-month low. Construction saw its smallest rise since August 2013 and civil engineering contracted for the first time in four months. New business similarly decelerated to its slowest pace in nearly two years with uncertainty ahead of Thursday's general election an often cited factor.

In line with the manufacturing PMI (51.9), April's survey of construction points to a clear moderation in the pace of expansion. Underlying trends still appear positive but business activity in the sector is unlikely to reach its full potential until the election is safely out of the way. And with the opinion polls so close, determining which parties will form the new government could well take some time.

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.