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UK construction sector activity edged lower in April as rising energy and raw material costs weighed on client budgets, S&P Global said on Friday.
The S&P Global-CIPS UK construction purchasing managers' index decreased to 58.2 points in April from 59.1 in March. The print just barely beat the market forecast, cited by FXStreet, of 58.0.
S&P highlighted UK construction companies reported another strong rise in business activity during April, but the speed of recovery lost momentum amid weaker new order gains. Survey respondents noted that higher costs and worries about the economic outlook had started to hinder demand, it said.
However, S&P said signs of a slowdown in client spending contributed to another drop in growth expectations, with the degree of optimism about future workloads the lowest since September 2020.
Further, S&P said the near-term outlook for construction activity deteriorated in April as total new order volumes expanded at the slowest rate for four months. Escalating raw material prices and hesitancy due to higher borrowing costs and geopolitical uncertainty were among the reasons for reduced demand.
Tim Moore, economics director at S&P Global, said: ‘The construction sector is moving towards a more subdued recovery phase as sharply rising energy and raw material costs hit client budgets. House building saw the greatest loss of momentum in April, with the latest expansion in activity the weakest since September 2021. Commercial and civil engineering work were the most resilient segments, supported by Covid-19 recovery spending and major infrastructure projects respectively.
‘Tender opportunities were less plentiful in April as rising inflation and higher borrowing costs started to bite. Consequently, longer-term growth projections have slumped from January's peak, with business optimism now the weakest since September 2020.’
The UK construction PMI was compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies, collected from April 11 to 28.
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