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UK Construction Industry Slows as House Building Falls

In February 2016 construction activity in the UK experienced its slowest rate of growth in 10 months.

The slowdown has been attributed to customers delaying intended projects and builders hiring fewer workers in response to an uncertain economic outlook.

Markit Economic confirmed recently that its Purchasing Managers’ Index (PMI) went down to 54.2 from the January high of 55. Any result above 50 is a confirmation of growth, but lower scores imply a slower rate of expansion. The median estimate in a survey carried out by Bloomberg suggested that economists had predicted a rise to 55.5 in February.

Housebuilding was the strongest performer in the industry for most of last year, but last month it became the weakest, growing at its slowest rate since June 2013.

Experts say that these figures are evidence of an economic slowdown. The manufacturing survey carried out by Markit indicated that last February factories experienced their lowest month in nearly three years. The services gauge due to be published soon is expected by economists to show a decline.

Markit confirmed that growth in construction orders have weakened and builders are not optimistic about their prospects in the year ahead.

Markit economist Tim Moore said that some clients have been unwilling to commit to new projects so far this year. The more cautious purchasing actions are regarded as additional confirmation that construction firms are bracing themselves for a prolonged period of slower growth in 2016.

Specialists in Construction Insurance

Builders slowed down on their hiring practice in response to the uncertain forecast, with job creation totals reaching their lowest since August 2013. They reported the slowest increase in residential construction activity since October 2013, and commercial activity was also on the decline.

Markit survey respondents attributed the slowdown to less than ideal levels of customer demand and overall uncertainty about the UK’s economic future.

The Chartered Institute of Procurement and Supply helped put the survey together. Chief executive David Noble said that the UK housing sector once led the way with a strong performance, but now it is offering a poor show, with the slowest rate of growth for more than two and a half years.

Mr Noble said that the next few months will be key ones when it comes to understanding whether this lowered optimism is justified and whether more serious issues will end up coming to light.

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