UK construction expands at slowest pace in three years in Apri

Britain's construction sector slowed down in April, reaching its slowest pace of expansion in almost three years, a survey released on Wednesday (4 May) from Markit Economics and the Chartered Institute of Procurement & Supply showed. Its figures marked the 36th consecutive month of expansion but indicated the slowest rate of output growth since June 2013.

The Markit/CIPS UK Construction Purchasing fell to 52 last month, compared with the 54.2 reading recorded in March and with analysts' expectations for a slight drop to 54.

Commercial building was the best-performing broad category of activity in April, although this sector grew at its slowest pace since July 2013, Markit added. Growth in the residential construction sector improved only marginally from March's 38-month low, while civil engineering activity recorded the slowest pace of growth so far in 2016.

Markit said construction companies cited a number of factors weighing on client spending, including increased uncertainty about the economic outlook and unwillingness to commit to new projects.

Construction firms indicated they had registered a renewed decline in confidence over the business outlook for the next 12 months, resuming a negative trend that has characterised the sector since June last year.

April's survey pointed to the weakest degree of confidence for almost three years, which construction firms attributed to stagnating new business volumes.

Analysts suggested the disappointing figures meant the first quarter slowdown was unlikely to prove temporary, with the construction sector hampered by a number of issues, including Britain's future within the European Union.

"Stalling new order volumes not only set the scene for further weakness ahead, but are already weighing on staff hiring and input buying across the construction sector," said Markit's senior economist Tim Moore.

"Softer growth forecasts for the UK economy, alongside uncertainty ahead of the EU referendum appear to have provided reasons for clients to delay major spending decisions until the fog has lifted."

There was slightly better news on the employment front, where staffing levels continued to increase across the sector last month, meaning job creation has been recorded in each month since June 2013, which represents the longest period of sustained employment for almost a decade.

However, construction firms indicated the latest increase in payroll numbers was marginal and added they were adopting a more cautious approach to hiring.