Rate of construction recovery slows

The continued expansion of activity across the construction industry continued in April, albeit at a slower rate than over the past six months, the latest survey of purchasing managers has found.

The latest Markit/CIPS Construction Purchasing Managers Index, which measures the rate of increase or decrease in the activity of purchasing managers, showed activity continued to increase in April, with a score of 60.8, well above the 50.0 mark, which separates expansion from contraction.

This is the 12th straight month that the index has with recorded an expansion in activity.

However, the rate of increase dipped slightly in April, down from 62.5 in March. This was the slowest rate of increase for six months.

The survey found residential construction was the best performing area of activity, with the rate of expansion in April one of the fastest seen over the past ten years. The current 15-month period of continuous housebuilding growth is the longest since 2006-07.

Commercial activity also increased sharply in April, while growth of civil engineering activity eased markedly and was the slowest since September 2013.

The slowing of the rate of expansion comes after the latest construction output figures from the Office for National Statistics showed that output grew by just 0.3% in the first three months of the year, when compared with the final quarter of 2013, with the industry hampered severe winter storms and flooding.

Tim Moore, senior economist at Markit, said the PMI survey showed that “current UK construction trends are healthier than the relatively meagre official growth estimates so far this year”.

He said: “Construction growth has started to moderate from the rapid pace seen over the winter, but strong rises in new work and payroll numbers provide ample optimism that output will expand strongly over the course of 2014.

“Better economic conditions, a surge in house building, improved access to finance and greater investment spending are all important tailwinds for UK construction growth this year.”

“April’s survey indicated that residential building was the fastest growing area of UK construction activity, with the latest expansion correlating with at least 45,000 new housing starts per quarter.

“While there looks to have been a further steep upturn in new housebuilding starts in April, the trend remains well short of estimated increases in underlying demand each year.

“Set against the tightening supply chain backdrop, a difficult challenge lies ahead for the housebuilding sector to make sure it doesn’t hit a brick ceiling.”