GB: PMI Construction

Wed May 02 03:30:00 CDT 2018

Consensus Actual Previous
Level 50.5 52.5 47.0

Following a weather-hit March, construction activity more than made back its ground in April. The sector PMI was 52.5, up more than 5 points versus the previous period and stronger than expected. It was also the highest reading in five months, albeit still well short of the levels seen before the Brexit referendum.

Residential building was the best performing subsector and growth here saw its fastest pace since May 2017. Commercial construction and civil engineering also registered a return to positive rates of expansion.

Some signs of an underlying slowdown were apparent in only a marginal increase in new orders but employment was up again and business confidence climbed to its highest mark since last May. Meantime, while another lengthening in delivery times was testimony to continued capacity pressures, input cost inflation was only unchanged from March's 20-month low.

Stripping out special factors, the indications are that UK construction is growing, but only slowly. And, despite stronger sector sentiment, this looks likely to remain the case until the Brexit picture becomes a good deal clearer.

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.