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UK Construction PMI ahead of expectations, but optimism subdued

Date: Wednesday 04 Jan 2012

UK Construction PMI ahead of expectations, but optimism subdued

-Observers wary of apparent strength in data.

-December data signalled a modest rise in UK construction sector employment.

-Concerns over future market conditions and low client confidence weighed on optimism.

-UK construction companies reported a further increase in purchasing activity in December.


The Markit/CIPS construction sector purchasing managers´ index (PMI) for the month of December signalled a solid rise in UK construction sector output, extending the period of sustained expansion to 12 months.

The index rose to 53.2 points (Consensus: 51.5) from 52.3 the month before.

Growth of activity was supported by an increase in new business, which in turn led to a further rise in employment. Likewise, for the first time in nine months all three broad construction categories (civil engineering, residential construction and commercial construction) monitored registered rises in activity.

“Confidence over future business prospects, however, remained relatively muted,” Markit explained. As well, the latest increase in output remained below the series average.

Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:

“Despite the overall growth in construction output and relatively milder weather conditions, December’s PMI painted a mixed picture and therefore offered little to raise the spirits.

“Civil engineering was the star performer with the strongest increase on the previous month but this must be viewed in the context of volatile activity flows at the end of the year, and it’s still too early to measure the impact of some of the big Government spending projects announced in the Autumn Review statement.

“Overall expectations for the coming year were generally hopeful but continue to be skewed by wider economic uncertainties. Though there were modest increases in employment, it’s likely that many firms were hiring through necessity rather than optimism about any pick up in business in the next couple of months.”

AB

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