Civil construction shores up fall in housebuilding

Civil engineering replaced housebuilding as the main growth driver
Civil engineering replaced housebuilding as the main growth driver

Construction output rose modestly in February, as civil engineering growth helped to offset a slowdown in housebuilding.

The closely watched Markit/CIPS UK Construction purchasing managers’ index (PMI) rose to 52.5 last month, up from 52.2 in January and above economists’ expectations of 52.0.

A reading above 50 indicates growth.

Civil engineering replaced housebuilding as the main growth driver, as residential construction rose at its slowest pace in six months.

Commercial building, meanwhile, declined for the first time since October.

While the index held above 50 for the sixth consecutive month, the rate of output growth was weaker than its post-referendum peak of 54.2 in December and was “subdued” compared to trends seen over the past three-and-a-half years, the report explained.

Some firms said demand had “softened” since the start of the new year.

Tim Moore, a senior economist at IHS Markit, said: “Survey respondents mainly cited an underlying slowdown in sales growth, with the latest rise in new work the weakest for four months.

“In some cases, construction companies reported that sharply rising input prices had a disruptive impact on contract negotiations.”

He said suppliers have made efforts to pass on rising energy costs, with global commodity prices amplifying the effects of the weak sterling exchange rate.

Input costs have climbed in part due to the post-Brexit collapse of the pound, which has made imports more expensive for domestic firms.