Construction output slows for third month running

Figures released today showed a reduction in construction output in December as the pace of growth slowed for the third month running.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) fell from 59.4 in November to 57.6, the lowest increase in construction output for 17 months.

The survey showed house building remained the best performing area of construction activity, although the pace of expansion retracted to its “least marked” since June 2013.

Tim Moore, senior economist at Markit said: “UK construction output growth retreated further in December, but another strong expansion of house building activity ensured that the sector continued to perform impressively overall. Indeed, over the course of 2014, UK construction firms recorded the strongest calendar year of residential building since the survey began in 1997.”

Commercial construction also increased, but at a slower rate than in November.

Construction companies also recorded an increase in new business volumes during December and anecdotal evidence pointed to strong demand for new residential development and a continued recovery in tenders for commercial projects.

However, the rate of overall new order growth slowed for the sixth successive month to its weakest since June 2013.

David Noble, group chief executive officer, Chartered Institute of Procurement & Supply, said: “The sector is still expanding with the index posting at a higher level than the longer-term average, and led primarily by residential development – but it has become a victim of its own success as it struggles to keep up with its own speed of recovery.

“With increases in new business, comes pressures on the availability of talented staff and a squeeze on the performance of supply chains.”

Civil engineering output also fell civil slightly, ending a 17-month period of continuous expansion.

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