Construction industry grows at its slowest pace in three years
The makers and manufacturers are marching a little slower than they once were – and a great deal slower than chancellor George Osborne would like.
Fresh purchasing managers' index (PMI) figures for the construction sector out this morning showed that the building industry expanded at its slowest pace since June 2013 last month. That comes off the back of yesterday's data which also showed the manufacturing sector contracted in April for the first time in three years.
Things are a little brighter for construction firms as the PMI came in at 52.0 – above the crucial 50 mark which separates expansion from contraction. However, that was down from 54.2 in April and represents the weakest pace of growth for 34 months.
Read more: Engineers and manufacturers clash with government over the apprenticeship levy
"UK construction firms reported their worst month for almost three years in April, meaning that the first quarter slowdown is unlikely to prove temporary," said Tim Moore, senior economist at Markit who compiles the Markit/Chartered Institute of Procurement and Supply (CIPS) PMI.
"Softer growth forecasts for the UK economy alongside uncertainty ahead of the EU referendum appear to have provided reasons for clients to delay major spending decisions until the fog has lifted."
Builders said that new business was lacklusture in April as they saw a "renewed decline in confidence about the year-ahead." While employment in the industry went in the right direction, businesses said they were using more sub-contractors in a sign that they may be slightly less willing to make long-term commitments.
In a further blow to the government's aim not only to revive the non-services parts of the UK economy but to boost housebuilding, "April's survey highlighted one of the weakest rises in housing activity since early 2013," Moore added.
Read more: Is the next slowdown just around the corner?
Mike Chappell, managing director for construction at Lloyds Bank, however, warned not to read too much into the slowdown:
"The past couple of months have seen a number of the sector’s major commercial players report robust results with an upbeat outlook as the sector continues to make progress in improving margins and ensuring order books consist of sustainable work."