UK construction continued to expand in February but at its slowest rate since April 2015. At 54.2, the mid-quarter print was down from a weaker revised 55.0 in January and comfortably short of market expectations.
For the first time since January 2013 residential building was the worst performer and the increase in activity here was the most sluggish since the middle of 2013. Commercial construction also slowed to its weakest pace since May last year leaving just civil engineering to pick-up momentum and growth here saw a 5-month high.
Aggregate new business decelerated for a third month out of the last four and the increase in headcount was the smallest since August 2013. Optimism about the year-ahead outlook hit its worst level since the end of 2014.
Prices news was similarly more subdued and input cost inflation moderated to close to its low of the last three years.
Today's report reflects increasing uncertainty about the economic outlook. Construction is still growing but activity rates are well down on those seen over much of 2014/15 and with manufacturing essentially stagnating, a sustained economic upswing will now be all the more dependent on a healthy service sector.
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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