UK construction activity eases more than expected in December

The construction sector activity in the UK economy eased more than expected from November’s five month highs, a fresh report from Markit Economics showed on Wednesday.

The final Purchasing Managers' Index (PMI) in the UK retreated to 52.2 points in December, down from 53.1 booked in November and worse than a reading of 52.5 anticipated.

Key Points:

• Housing remains by far the best performing area of activity
• New orders rise at fastest pace since May
• Sharp rate of input price inflation continues in December

Tim Moore, Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI®, noted: “The UK construction sector achieved a moderate expansion of business activity at the end of 2017, although the recovery remained uneven and slowed overall since November. Construction companies indicated that another strong contribution from house building helped to offset subdued civil engineering activity and reduced volumes of commercial work."

“Total new orders picked up at the fastest pace for seven months in December, which provides a positive signal for construction workloads in the short-term. Resilient demand and forthcoming project starts also led to greater job creation and the strongest increase in input buying for two years."

“However, construction firms indicated that longerterm business confidence is still relatively subdued, largely reflecting concerns about the domestic economic outlook. Exactly 37% of the survey panel forecast a rise in construction activity over the course of 2018, while around 11% anticipate a reduction. As a result, the balance of UK construction companies expecting growth in the year ahead remains among the weakest recorded by the survey since mid-2013."

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