Construction output dragged down by building slump

The closely watched Markit/CIPS UK Construction purchasing managers’ index (PMI) fell to 52.2 last month, down from 52.5 in February and below economists’ expectations of 52.5.

A reading above 50 indicates growth.

A drop-off in housebuilding was the main drag on the sector, but was partially offset by a rebound in commercial and civil engineering activity, the report said.

It comes as separate PMI figures on Monday showed manufacturing output eked out its weakest growth in eight months for March following a slowdown in consumer goods production.

Tim Moore, senior economist at IHS Markit, said there were signs that the construction sector was falling victim to a cooling off of the housing market.

He said: “Civil engineering projects were the construction sector’s main growth engine in March, driven by rising infrastructure spending and a strong pipeline of new work throughout the UK.

“March data showed a slight rebound in commercial construction activity. Survey respondents noted that the resilient economic backdrop and receding Brexit-related anxieties have helped to stabilise client demand after the disruption to development projects last summer.”

Following the PMI reading, sterling was down 0.4% versus the US dollar at 1.243 and 0.3% lower against the euro at 1.166.

The report found that soaring input costs sparked by the Brexit-hit pound remained at high levels last month, but had dropped back from an eight-and-a-half-year pinnacle in January.