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Construction growth slows in April

May 7th, 2014

The construction recovery slowed to its lowest rate in six months according to the latest survey of buyers.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index fell to 60.8 in April from 62.6 in March.

But output continued to rise strongly in all sectors with the index way above the 50 no-change threshold and the long-run survey average of 54.3

New business figures were also the highest seen this year and employment levels rose for the eleventh month on the trot.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “While the rate of growth slowed slightly in April, the construction sector is still experiencing a remarkably strong and consistent period of expansion.

“Positive news abounds as housing activity reached a near ten-year high and the sector as a whole benefitted from the sharpest rise in new business since January this year.

“This, alongside improving economic conditions, continued to drive strong job creation, giving further cause for optimism about the future.

“ House building was again the leading light in April, with growth now running for the longest continuous period since 2006/2007.

“This was further supported by a solid expansion in commercial activity; meanwhile civil engineering showed some signs of moderation, as companies looked for new work to replace flood relief activity.

“Reflecting the fast pace of growth filtering through the supply chain, vendor performance in April continued to deteriorate, typified by shortages of capacity, low stocks and worsening lead times.

“Beyond this, the easing of cost inflation this month was acknowledged to have brought some relief to the industry. ”

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, 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.

“Moreover, the latest survey is another indication that current UK construction trends are healthier than the relatively meagre official growth estimates so far 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 house building 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’. ”

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