UK construction growth dipped in July due to a slight fall in the number of residential and civil engineering projects underway. However, the slowdown in these areas was countered by a boom in commercial activity, which enjoyed its fastest rate of growth since March.
According to the latest Markit/Chartered Institute of Procurement & Supply (CIPS) UK Construction Purchasing Managers’ Index (PMI), construction output growth slowed in July from the four month high noted in the previous month.
July’s reading of 57.1 was a full point behind the 58.1 reading taken in June, and was largely attributed to a slowdown in business activity and incoming new work in the residential market, which saw its weakest month for expansion since mid-2013.
Report author and senior economist at Markit, Tim Moore, points out that confidence amongst construction firms remains high despite the slight dip in activity during July.
He says; “July’s growth slowdown is the first for three months and perhaps a sign that the post-election impact on construction confidence has started to diminish.
“Reflecting this, UK construction firms’ business activity expectations moderated from June’s 11 – year peak but remain strong overall.
“Commercial activity was a key growth driver during July, which partly offset ongoing weakness in civil engineering and softer residential building trends – sustained growth across the UK economy so far this year has firmed up demand for commercial building work, with construction companies noting a particularly strong appetite for new development projects among clients.”
One of the greatest boosts for the commercial construction sub-sector was the improving economy, which has seen a number of delayed projects resumed over the summer months and has therefore provided some stability for business activity levels. It is hardly surprising, then, that firms remain upbeat, with 55 per cent of companies questioned claiming to expect an increase in business activity during the next 12 months and only 4 per cent believing a reduction in growth prospects is on the cards.
CIPS group chief executive officer David Noble says; “Budget cutbacks and delayed decision-making will have had some impact on civil engineering activity and though housing is still a strong performer, commercial activity was the only area to see faster growth in July.
“Overall the sector’s optimism was still strong, as staffing levels remained high in anticipation of future success, though issues around sourcing skilled individuals remained a thorn in the side of the sector.”
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