Building firms suffer slowdown in expansion

Britain’s construction sector saw its weakest pace of growth for 17 months in December amid signs that the surge in house building may be cooling, a key survey yesterday indicated.

Overall construction activity is still seen as very decent. Picture: Getty

Figures from the closely monitored Cips/Markit purchasing managers’ index revealed a headline activity reading of 57.6, well ahead of the 50 level that separates growth from contraction, but a fall from November’s 59.4 and the third month of slowing growth in a row.

House building was the strongest performing area in December, though its pace of growth slowed to its lowest level since June 2013.

The UK’s property market has come back from its post- recession highs in the middle of 2014, with mortgage approvals falling to their lowest in more than a year and house price growth slowing.

But Markit noted that 2014 was still the strongest calendar year of residential building since the survey began in 1997 – news that will provide a boost for the coalition government in the run-up to May’s General Election.

Commercial construction also increased at a solid pace, albeit slower than the previous month. Civil engineering activity fell slightly, marking the end of 17 months of continuous expansion in this area.

David Noble, chief executive of the Chartered Institute of Procurement and Supply, said: “The sector continues on its levelling path this month, with procurement and supply management professionals reporting continued strong growth but with a weaker trajectory than that seen in recent months.”

Construction firms remained upbeat about prospects for the year ahead with 52 per cent forecasting growth in activity, against 13 per cent anticipating a reduction.

However, the balance of firms expecting growth over the coming 12 months was the lowest since August 2013.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “A significantly softer survey than expected, although it still points to very decent construction activity overall.”

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