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UK construction PMI holds steady in March despite inflationary pressures

UK construction sector growth was unchanged in March despite inflationary pressures, according to a survey released on Wednesday.
The S&P Global/CIPS construction purchasing managers’ index printed at 59.1, in line with February and comfortably above the 50.0 mark that separates contraction from expansion. Analysts were expecting a drop to 57.8.

Commercial work was the best-performing segment, with projects restarting as pandemic restrictions were lifted. However, the recoveries in civil engineering and residential work lost momentum last month.

The survey found that order books rose at the fastest pace for seven months, but the overall rate of input price inflation accelerated sharply since February and was the highest for six months.

It also showed that escalating inflationary pressures and concerns about the economic impact of the war in Ukraine contributed to a sharp deterioration in business optimism, with confidence about the growth outlook at its weakest since October 2020 amid concerns that clients will cut back spending.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “A heartening result in March overall where new order levels were the highest since August last year, but not all the sub-sectors offered an equal contribution to output this month. Commercial projects were the most abundant with the strongest rise in almost a year, but residential building became the laggard of the pack as affordability concerns were a factor in holding back progress particularly in new housing and refurbishment work.

“The crippling rise in inflation ramped up again as transport and raw materials went up in price. Longer wait times for deliveries were reported by a third of supply chain managers. Construction companies are braced for more disruption on the horizon as a result of the Ukraine conflict. The rise in purchasing demand fed into higher costs for materials already in short supply as energy hikes also impacted on business costs.”

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