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The latest IHS Markit/CIPS UK Construction PMI survey covering March has found that business activity fell amid unusually bad weather. In particular civil engineering work declined at sharpest pace for five years but thanks to a strengthening pound input cost inflation moderated to 20-month low. 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.

Tim Moore, Associate Director at IHS Markit and author of the PMI survey, said: “The construction sector continued to experience subdued business conditions during March, but snow-related disruption was a key factor behind the marked decline in activity on site reported by survey respondents.

“Total construction output fell at the fastest pace since July 2016, driven by the sharpest reduction in civil engineering activity for five years and a renewed fall in commercial work. House building increased slightly during March, although the rate of expansion was still softer than at any time in 2017.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “Civil engineering and commercial activity were the most affected, as housing became the best performer. However, the marginal improvement in residential building was softer than in most of 2017 indicating there may be something more serious ailing the sector, as respondents also cited continuing Brexit-related uncertainty and disappointment over the performance of the UK economy.

“There was some good news as purchasing levels increased slightly, sustained by the respite of pressure from cost increases which were the lowest since June 2016 and where the worst impact of the weak pound on prices may have dissipated. With the strongest job creation this year, firms had a more hopeful outlook for the coming months coupled with the highest level of optimism since June 2017, as they scoured the wider marketplace for opportunities.”

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) fell sharply from 51.4 in February to 47.0 in March, to register below the 50.0 no-change threshold for the first time in six months. Moreover, the latest reading signalled the fastest overall decline in construction output since July 2016. Where a drop in work was reported, survey respondents noted that unusually bad weather had disrupted staff availability and activity on site.

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