GB: PMI Construction

December 4, 2017 03:30 CST

Consensus Actual Previous
Level 51.0 53.1 50.8

UK construction had a moderately good November. The sector PMI weighed in at a comfortably stronger than expected 53.1, up from October's 50.8 and its highest reading in five months.

The headline improvement nonetheless masked a very lopsided recovery with a robust upturn in housing contrasting with further declines in both civil engineering and, in particular, commercial building. Brexit was again cited as a major restraining factor.

Aggregate new orders and employment also saw their fastest growth since June and lead times for inputs continued to lengthened significantly. However, cost inflation eased to its lowest level in fourteen months amidst signs that exchange rate pressures had lost some of their earlier intensity. Even so, only a small rise in business confidence left a level that was still amongst the least optimistic since the middle of 2013.

In sum, the November PMI report is mixed and certainly lacks the broad-based strength needed to be really confident about the sector's outlook going into 2018.

The Construction Purchasing Managers' Index (PMI) provides an estimate of business activity in the UK construction sector for the preceding month 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 gross domestic product. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and Markit.

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.