UK February construction PMI contracts to 49.5, first time in 11 months

The construction sector activity in the UK entered the contraction territory for the first time in eleven months last month, the latest survey report from Markit Economics showed this Monday.

The final Purchasing Managers’ Index (PMI) came in at 49.5 in February, down from 52.6 recorded in January and missing consensus estimates pointing to a reading of 52.0.

Key Points:

Slight fall in construction output, led by commercial and civil engineering work.

Housing is the only category to register growth in February.

Sharp deterioration in supplier performance.

Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:

“The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects. Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work therefore hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.”

“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.”