UK construction PMI beats expectations in February

The pace of UK construction growth unexpectedly improved in February thanks to strength in civil engineering, according to data released on Thursday.

The Markit/CIPS UK construction purchasing managers’ index rose to 52.5 from 52.2 in January, above the 50 mark that separates contraction from expansion for the sixth consecutive month.

Economists had been expecting the reading to remain unchanged at 52.5.

However, the rate of output growth was still weaker than its post-referendum peak of 54.2 in December 2016 and subdued compared to the trends over the past three-and-a-half years.

Civil engineering replaced house building as the main growth driver, as residential activity increased at the slowest pace for six months, while commercial building dropped for the first time since October 2016.

Survey respondents said the resilient economic backdrop and a stabilisation in client confidence since the EU referendum continued to help drive construction growth in February. But there were also reports that demand growth had softened so far this year.

Tim Moore, senior economist at IHS Markit, said: “February’s survey data highlights that the UK construction sector has rebounded from its postreferendum soft patch but remains on a relatively slow growth trajectory. Weaker momentum in the house building sector was a key factor weighing on construction growth, alongside a renewed fall in work commercial projects.”

Howard Archer, chief UK and European economist at IHS Markit, said: "This is a largely uninspiring report indicating a lacklustre construction sector - while there is a modest rise in the activity index from January’s four-month low, it is worrying that orders growth was the weakest since October and limited. Furthermore, high price pressures are a serious concern.

" Following on from a modestly softer manufacturing purchasing managers survey for February (with a slowdown in domestic orders growth), the lacklustre construction PMI does little to dilute suspicion the UK economy is beginning to falter. Signs of slowing UK growth is particularly evident in consumer spending. Much attention will be focused on how well the services sector seems to be holding up when the February purchasing manager’ survey is released on Friday."