Growth in the UK’s construction sector slowed in March as customers delayed making spending decisions because of uncertainty over the general election.
Housebuilders, commercial builders, and civil engineers all reported slowing output growth last month, with the rise in new orders also easing compared with February.
The slowdown, indicated by the latest Markit/CIPS construction PMI, suggested the sector had “lost some of its swagger” since last year, according to Tim Moore, senior economist at Markit.
“All three main categories of construction activity saw a growth slowdown in March, in part reflecting softer new business gains as some clients delayed spending decisions ahead of the general election.”
Despite the dip in growth, confidence among UK builders about the 12 months ahead jumped to a nine-year high in March, boosted by an improving economic backdrop and strong order books.
The headline PMI index slowed to 57.8 in March from 60.1 in February. The higher the number above 50, the stronger the expansion in activity. Economists had expected a stronger performance for last month, forecasting 59.5.
Jobs growth in the UK construction sector also slowed last month, but remained safely above the 50 mark at 58.
David Noble, chief executive at CIPS, said the delay in spending plans triggered by the election was just a blip.
“The main takeaway from this month must be the highest levels of confidence seen in the construction sector for almost a decade. Though there may be some low-level obstacles still to come, the sector gets the green light as there is evidently belief that the future for the construction sector is a sustainable one,” he said.
The detail of the March PMI suggested there was little sign of easing when it came to the strong cost pressures facing builders.
Strong demand for construction materials combined with stock shortages pushed prices up. Firms were also hit by a lack of subcontractor availability, which fell to the lowest level in seven months in March.
The growth in construction output indicated by the PMI survey is at odds with the official data from the Office for National Statistics, which suggests the sector is shrinking.
The construction industry was badly hit during the financial crisis, and has yet to fully recover, with output still below pre-crisis levels. In the fourth quarter of 2014, construction output fell by 2.2% compared with the third, according to the ONS.
Howard Archer, chief UK economist at IHS Global Insight, said that following a weak start to the year, with construction output officially falling 2.6% in January, February and March would have to be particularly strong months if the sector were to show any growth in the first quarter.
The construction PMI followed a better equivalent survey for the manufacturing sector, published on Wednesday.
