Construction growth moderating but output still rising

Latest News Tue, Mar 22, 2016 5:34 PM

Construction growth moderating but output still rising


Construction growth started to moderate from rapid rates of growth seen over the winter, according to the latest Markit/CIPS purchasing managers’ index for April, though growth trends are far healthier than the government’s own ‘meagre’ official estimates, says the forecaster.

Strong output rises were recorded, but the seasonally-adjusted index fell back slightly from 62.5 in March to 60.8 in April (anything above 50 equates to growth).

The closely-watched Markit/CIPS index has now recorded higher construction output for 12 months running.

Residential construction was the best performer with a rate of expansion one of the fastest seen over the past ten years, while commercial activity increased sharply. The latest survey also pointed to a steep and accelerated rise in ‘new business’.

However, the forecaster became the latest to warn of supply chain pressures and materials shortages as an emerging risk to further growth. The survey’s ‘vendor performance’ (materials) index registered one of the sharpest falls seen in the past 16 years and there was another steep drop recorded in the availability of sub-contractors.

"Set against a tightening supply chain backdrop, a difficult challenge lies ahead for the house building sector to make sure it doesn’t hit a 'brick ceiling'," said Markit senior economist Tim Moore.

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