UK construction companies signalled that business conditions remained subdued during October.
Output growth was largely confined to house building, which partly offset lower volumes of civil engineering and commercial activity.
Moreover, the balance of construction firms expecting an increase in business activity over the next 12 months eased to its weakest since December 2012. Caution in terms of the outlook for construction workloads meant that employment numbers increased at one of the slowest rates seen over the past four years.
At 50.8 in October, up from 48.1 in September, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) moved back above the 50.0 no-change mark. However, the latest reading was weaker than the post-crisis trend (54.7) and signalled only a marginal rise in overall construction output.
Commercial building decreased for the fourth month running in October, which survey respondents liked to worries about the UK economic outlook and subsequent delays to decision-making among clients.
Civil engineering was the worst performing sub-category, with some firms citing a lack of big-ticket infrastructure projects to replace completed contracts.
A solid increase in residential building work underpinned the slight upturn in overall construction output during October. The latest rise in housing activity was faster than in September, but still subdued in comparison to the average for 2017 to date.
October data pointed to a marginal increase in new work across the construction sector, thereby ending a three-month period of decline. However, the rate of new order growth remained weaker than recorded at any time from mid-2013 to early last year.
Tim Moore, Associate Director at IHS Markit, said: “Greater house building was the sole bright spot in an otherwise difficult month for the construction sector.
"Sustained declines in civil engineering and commercial activity meant that large areas of the building industry have become stuck in a rut.
“Reduced tender opportunities and fragile demand are placing a dark cloud over the near-term outlook. October survey data indicated that UK construction companies are now the least confident about their forthcoming workloads since December 2012.
"Staff recruitment has also begun to tail off as construction companies head into the winter with heightened concern about demand conditions.
“The recent soft patch for civil engineering activity has been the most severe for around four-and-a-half years, linked to a shortfall of new contracts to replace completed work on infrastructure projects.
“Commercial building also fell in October, with survey respondents noting that concerns about near-term UK economic prospects had impacted on private investment and led to delayed spending decisions.
“Residential work has been a key growth engine for construction so far in 2017. However, some firms commented on renewed apprehension about the durability of house building outperformance, which has been achieved against a backdrop of sustained policy support and ultra-low interest rates.”
