UK PMI Construction rose to 48.4 in January, up from 44.4, beat expectation of 44.9. While that still suggests contraction, it’s the best reading since May 2019. New orders were close to stabilization. There was a boost from receding political uncertainty. Business optimism also rebounded to its highest since April 2018.
Tim Moore, Economics Associate Director at IHS Markit, which compiles the survey:
“The construction sector downturn lost intensity in January amid slower reductions in house building, commercial work and civil engineering activity. Measured overall, the latest dip in construction output was much shallower than in December, with survey respondents often commenting on improved willingness to spend among clients since the general election.
“Commercial work dropped at the slowest pace since the start of 2019 and was the main beneficiary of receding political uncertainty. UK construction companies also commented on signs of a turnaround in demand conditions across the residential development category during January. Civil engineering remained the weakest performing area of construction work as firms across the supply chain cited a lack of opportunities to replace completed contracts.
“Despite concerns about prospects for work on infrastructure projects, latest data revealed a strong rebound in business optimism across the construction sector as a whole in January. The degree of positivity reached its highest level since April 2018, driven by hopes that improving confidence among clients will continue to translate into new contract awards over the course of 2020.”
