Purchasers report growth in ouptut in March, but expansion subdued

Weak growth in housing activity hit output growth across the wider construction sector in March, according to the latest Markit/CIPS index.

Output grew in March but the pace of expansion was subdued and new business growth was at its weakest since April last year.

The index also highlighted the weakest increase in housing activity for over three years, since January 2013, which offset faster rises in commercial work and civil engineering.

March’s data also highlighted greater caution among construction companies on staff hiring, with the rate of employment growth easing to its slowest since June 2013. Meanwhile, subcontractor usage decreased at a steeper pace than in February, contributing to the least marked rise in sub-contractor charges for just over two-and-a-half years.

Markit senior economist Tim Moore said the latest survey confirmed that the UK construction sector was experiencing its weakest growth phase since the summer of 2013.

“Residential building has seen the greatest loss of momentum through the first quarter of 2016, which is a surprising reversal of fortunes given strong market fundamentals and its clear outperformance over the past three years,” he said.

“Heightened uncertainty about the business outlook appears to have weighed on overall construction demand so far in 2016, with survey respondents citing cautious client spending patterns and a reduced willingness to commit to new projects.”

Mark Robinson, chief executive of public-sector procurement body Scape Group said sentiment displayed in the latest PMI was most likely driven by a combination of the upcoming EU referendum vote and UK local elections in May.

But he noted that the survey showed 51 per cent of respondents expected a rise in business activity over the next 12 months, against just 11 per cent who expected a reduction.

“These sparks of positivity should lead to a firing up of the industry over the next quarter, in order to deliver much needed infrastructure and housing right across the UK,” he said.