2018.04.0408:29:00UTC+00UK Construction Sector Contracts Most Since 2016 On Bad Weather

The UK construction sector contracted the most since mid-2016 as snow disrupted activity in March, survey data from IHS Markit showed Wednesday.

The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell to 47.0 in March from 51.4 in February. The reading was expected to ease to 51.0.

The score fell below the 50.0 no-change threshold for the first time in six months. Moreover, the latest reading signaled the fastest decline in construction output since July 2016.

Unusually bad weather conditions had been a key factor behind the drop in construction output, the survey showed.

However, business activity expectations and job creation both picked up in March, which provides a clear signal that construction firms anticipate a rebound in activity during the months ahead.

The overall reduction in construction output was driven by the sharpest drop in civil engineering work for five years. Commercial activity also decreased in March.

Housing bucked the wider trend for construction activity in March, although the latest upturn in residential building was only marginal.

New orders received by construction companies logged the sharpest fall since July 2016. Despite a soft patch for new work, employment growth accelerated to a three-month high.

Companies reported higher raw materials costs in March. Nonetheless, the rate of input cost inflation softened to a 20-month low.

"Though March's figures could be viewed as a temporary blip, without a strong pipeline of work, and strong risk strategies in place, the sector's health remains in question as we're still a long way off seeing it operate the way it has over the last year," Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said.