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Construction industry returns to growth in April

Stronger housebuilding figures help to stabilise sector.

May 2, 2019 The UK construction sector showed signs of stability in April as it returned to growth, helped by stronger house building, according to a closely watched survey.

The IHS Markit purchasing managers’ index for the construction industry rose to 50.5 in April, higher than 49.7 the previous month and marginally better than analysts’ expectations. A reading above 50 indicates expansion.

The figure was buoyed by residential work, which grew at its fastest pace of the year so far, while commercial construction and civil engineering activity continued to decline. A number of companies linked lower commercial activity to Brexit-related uncertainty and delayed client spending decisions, according to the report.

“The strongest rise in residential building since December 2018 was the only saviour of a sector otherwise heading for contraction again this month as deferred client decisions continued to [have an] impact on larger commercial and infrastructure projects, throwing the industry off-balance,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply, a professional body.

New orders fell for the first time since May 2018, while business optimism eased to its lowest since last October.

“Worryingly, forward-looking elements of the survey were weaker which bodes ill for construction activity in the near term at least,” said Howard Archer, chief economic adviser at EY Item Club, a forecaster.

“This was attributed to political uncertainty, increased concerns over the UK economy and subdued demand for commercial and infrastructure projects as Brexit uncertainties contributed to client unwillingness to commit to new projects.”

Despite the slight growth, the sector saw a small number of jobs cut in April after more than two-and-a-half years of increases. However, the forward-looking indicators remained “subdued”, with the sector “recording a drop in business optimism during April and the largest fall in new work for over one year”, according to Tim Moore, associate director at IHS Markit. Full Article from

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