Improved confidence for future growth

UK construction companies reported a subdued start to 2018, with total industry activity barely rising; a return to contraction in residential building activity was accompanied by near-stagnant commercial and civil engineering activity.

New orders declined, linked by many companies to market uncertainty.

On a more positive note, confidence towards future growth prospects improved, with many firms anticipating an increase in new project wins later in the year.

Meanwhile, intense cost pressures continued across the UK construction sector.

The seasonally adjusted IHS Markit/Cips UK Construction Purchasing Managers’ Index (PMI) posted 50.2 in January, down from 52.2 in December. The figure was just above the neutral 50.0 no-change mark, thereby signalling a fractional rate of growth that was the weakest for four months.

The latest data signalled that the sector’s main driver of growth in recent months, house building, slipped into decline, ending a 16-month expansion.

Duncan Brock, director of customer relationships at the Chartered Institute of Procurement and Supply, said: “With construction teetering on the edge of contraction, this surprise outcome will serve as a jolt to policymakers, that the impact of political and economic uncertainty remains large at the beginning of 2018.”