05.08.202109:40:00UTC+00UK Construction Sector Growth Moderates In July

The recovery in UK construction output lost momentum in July with slower growth seen in all three main categories of work, survey results from IHS Markit showed on Thursday.

The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell to 58.7 in July from June's 24-year high of 66.3. The reading was forecast to rise to 64.0.

The latest reading signaled the slowest overall increase in construction output since February.

House building was the best-performing category in July, followed closely by commercial building. Nonetheless, in both cases, the rate of expansion was the weakest since February.

Civil engineering activity also expanded in July but the pace of growth was the weakest in five months.

It was unsurprising that UK construction companies were unable to maintain output growth at the 24-year high seen in June, especially with widespread supply shortages and constrained capacity to take on additional orders, Tim Moore, an economics director at IHS Markit, said.

Total order books continued to improve in July, but the latest rise in new work was the weakest since March. Input buying also grew at a slower pace in July.

Respondents often cited difficulties keeping pace with the recent surge in demand for construction projects, especially due to raw material supply shortages and shrinking sub-contractor availability.

A rapid pace of input cost inflation continued in July, fueled by supply shortages and robust demand for construction items.

Finally, construction firms continued to hire staff at a strong pace, reflecting rising orders and confidence regarding the near-term outlook. However, optimism drifted down to the lowest level in six months.