UK construction activity declines for first time in 11 months

According to the report from IHS Markit, UK construction companies indicated that business activity levels fell during February.

At 49.5 in February, down from 50.6 in January, the headline seasonally adjusted UK Construction Total Activity Index registered below the 50.0 no-change threshold for the first time since the snow disruptions seen in March 2018. Aside from this brief weather-related decline in output, the latest reading was the lowest since September 2017. Economists had forecast a score of 50.3

Residential work was the best performing area of construction activity in February, with growth recorded for the thirteenth month running. However, the rate of expansion was only modest and therefore could not offset the declines recorded for commercial and civil engineering activity. In both cases, the pace of contraction was the steepest since March 2018.

February data signalled only a marginal overall rise in new work received by construction firms, with the latest index reading the weakest since May 2018. Political uncertainty was widely cited as a factor contributing to a lack of invitations to tender, particularly on commercial projects.

The index measuring business expectations for the year ahead remained inside positive territory, but the degree of confidence eased to a four-month low and was well below the long-run survey average.

Input buying fell for the first time since September 2017, reflecting softer demand. However, suppliers' delivery times lengthened to the greatest extent since last August. Input cost inflation meanwhile edged up since January, but was still at the second-lowest level since June 2016.