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Construction growth slips to slowest pace since June 2013

Election uncertainty during April has caused output and new orders to grow at their slowest rate since June 2013.

Growth in commercial construction work was at its lowest rate since August 2013, while civil engineering activity decreased for the first time in four months, according to the Markit/CIPS UK Construction PMI.

Residential building activity continued to perform strongly, but the pace of growth still slipped to its lowest point for 22 months.

Despite this, the index remained above the no-change value of 50.0, standing at 54.2 for April, down from 57.8 in March.

This indicates that the overall pace of growth in construction remains solid, despite a dip in work.

Subcontractor usage slowed slightly in April, but this did not prevent another significant drop in subcontractor availability and, as a result, charges rose at the fastest pace since the survey began 18 years ago.

Growth in job creation continued across the sector, linked to an increase in business investment and efforts to boost capacity, but the growth rate of staff hiring still remains below 2014 levels.

Looking ahead, business confidence for the next 12 months dipped from March’s nine-year high, but still remained ahead of the long-term average. Firms cited a return of underlying demand and the removal of election-related uncertainty as the key catalysts for this growth.

Commenting on the data, Chris Williamson, chief economist at Markit, said:

“Together with a steep slowdown in manufacturing and disappointing GDP data, the construction survey adds to evidence that the UK economy has hit a soft-patch. The upturn has become largely reliant on the service sector.

“However, the construction slowdown may prove temporary, having been at least in part due to uncertainty and construction project delays in the run up to the most closely fought General Election in a generation.

“Clearly the election outcome will be a major factor in determining growth and confidence in coming months.”

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