Housebuilding softness drags on construction growth, Markit/CIPS finds

A softening of the UK housing market led to a slowdown in construction industry growth in March, a closely followed survey revealed on Tuesday.

The UK construction purchasing managers' index from Markit and CIPS fell to 52.2 for March from 52.5 in February, a level at which economists expected it to remain. A PMI index reading above 50 indicates growth.

A slowdown in growth was seen across the UK construction sector, led by a weaker rise in residential building activity, while a modest increase in new work contributed to employment levels slowing to a three-month low but remaining in growth mode.

Civil engineering was the sector’s main growth engine in March, with data showing a slight rebound in commercial construction activity.

Markit found that construction companies remain relatively upbeat about their immediate future, with optimism regarding year-ahead business activity picking up in March to its second-highest since December 2015.

Construction procurement teams noted a reduced amount of Brexit-related anxiety had helped underpin confidence, along with a perception that the economic backdrop remains resilient.

Almost half of those surveyed expect a rise in business activity during the year ahead, against only 9% that forecast a decline.

Senior IHS Markit economist Tim Moore said: "A weaker trend for residential work has been reported throughout 2017
so far, which provides an indication that the cooling UK housing market has started to act as a drag on the construction sector.