Construction growth slows in April

Growth in construction activity slowed for the first time in two months, according to the latest CIPS/Markit figures show.

The headline index recorded growth for the sector, but at a slower pace than in the previous two months. The index was 53.3 in April, down from 56.4 in March.

A figure over 50 shows growth and a figure below 50 shows a contraction.

The economists behind the report said slowdowns in the housing and civil engineering sectors were responsible for the dip.

But the commercial sub-sector recorded significant growth, with activity rising at an accelerated rate.

Gemma Wallace, economist at Markit and author of the survey, said: “The Markit/CIPS Construction PMI suggests a less dismal start to the year than official figures are indicating, but the sector is by no means a picture of health.

“The survey pointed to a modest rebound in the first quarter from the weather-related weakness at the end of last year, contrasting with the huge 4.7% decline in output signalled by government statistics. However, there were signs of renewed weakness in April, particularly in the housing sector. Growth of civil engineering has also slowed sharply, most likely reflecting government spending cuts.

“The industry as a whole, meanwhile, continued to face steeply rising input costs, which are hurting profit margins and acting as an additional deterrent to hiring. The one bright spot seems to be the commercial sector where growth picked up in April, reflecting recent robust growth in manufacturing and services.”

Commenting on the report, David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said:”While growth in the construction sector has lost its pace compared to the start of the year, the PMI figures indicate that the situation is nowhere near as sluggish as latest ONS figures suggest.

“Data show that April’s expansion was tempered by weakness in the housing and civil engineering sectors, although overall new orders continued to rise - largely supported by the commercial sector, which benefited from a noticeable pick up in activity elsewhere in the economy.

“Low activity levels in the housing market, tighter government purse strings, rising input prices in fuel and materials, as well as poor cash flow in some cases, are clearly a worry and confidence among UK constructors remains at a historically low level as the number of jobs continues to drop.

“However, business sentiment improved slightly compared with March. This partly reflects expectations that growth in the wider UK economy will help support construction activity going forward.”