UK construction PMI unexpectedly drops in February

The pace of UK construction unexpectedly slowed in February, data released on Wednesday showed.

The Markit/CIPS UK construction purchasing managers’ index fell to 54.2 from 55.0 in January.

This was below forecasts for an increase to 55.5 and marked the lowest since April 2015.

Although still above the 50.0 mark that separates expansion from contraction, Markit said it pointed to one of the weakest rises in construction output seen over the past two-and-a-half years.

Tim Moore, senior economist at Markit, said: “Survey respondents noted that underlying business conditions remained favourable, especially in relation to commercial building and infrastructure-related work, but some clients had been hesitant to commit to new projects so far in 2016.

“Reflecting this, new order growth weakened again and construction firms were the least optimistic about their year-ahead growth prospects since December 2014. What’s different this time around is that construction companies have cut back on employment growth in response to the uncertain business outlook.”

Howard Archer, chief European and UK economist at IHS Global Insight, said: “There are some positives for the construction sector going forward, but it is clearly vulnerable to confidence among clients being pressurized by heightened UK and global economic uncertainties. The looming 23 June referendum on UK membership of the EU adds to these uncertainties – especially given the tightness of opinion polls.”