Prior 44.5
The downturn in the UK construction sector continues in March, even if at a less marked pace than in February. Of note, residential work remained by far the
weakest-performing category.
However, the standout in the report was a rapid acceleration in input
cost inflation. That is leading to companies seeing their operating margins come under considerable pressure. Of note, firms reported that the
war in the Middle East had pushed up fuel, transportation and
raw material prices.
S&P Global notes that:
“UK construction companies indicated a sustained
downturn in business activity during March, led by another
steep reduction in residential work. A degree of resilience
continued in the commercial and civil engineering
segments. There were some reports of a turnaround in
infrastructure work, especially in the energy sector.
“March data suggested a challenging near-term outlook
for construction activity as total new orders decreased
at one of the sharpest rates seen over the past six years.
Survey respondents commented on fragile consumer
confidence and delayed investment decisions in response
to the outbreak of war in the Middle East.
“Construction firms also signalled a recalibration of
their output growth forecasts for the year ahead. The
drop in confidence during March wiped out the steady
improvements in business optimism reported since the
Autumn Budget. Escalating inflationary pressures, gloomy
domestic economic prospects and higher borrowing costs
were widely cited concerns in March.
“International shipping delays meant that supply chain
performance deteriorated for the first time since last
summer. Moreover, fuel surcharges and rising transport
costs contributed to a surge in input cost inflation to
its highest for more than three years. The month-onmonth acceleration in cost inflation since February was
the largest recorded in nearly three decades of data
collection.”
This article was written by Justin Low at investinglive.com.