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Confidence at five-year low but order books strengthen

Growth in construction activity slowed to its weakest rate for six months in September, according to the latest IHS Markit / CIPS purchasing managers index.

The PMI measure of activity stood at 52.1 for September (where 50 equals no change), down from 52.9 in August.

The survey of construction firms found that civil engineering saw an overall decline in work for the second month running, but housebuilding and commercial activity increased – albeit at a slower rate.

Confidence among firms for the year ahead hit a five-year low, falling to its lowest point since the start of 2013.

This was mitigated by several positive indicators, with workforce numbers posting their sharpest upturn since December 2015 and subcontractor usage increasing at the fastest rate for more than two years.

Contractors are coming under pressure to complete projects pre-Brexit, IHS Markit / CIPS found.

However, new order growth saw its strongest performance since December 2016, which firms attributed to resilient demand and an upturn in new invitations to tender.

Conditions on the ground remained difficult, with delivery times for construction products and materials continuing to lengthen.

Input price inflation rose at its fastest rate for three months, with survey respondents citing higher fuel prices and raw material costs – particularly timber.

IHS Markit associate director Tim Moore said: “There were mixed signals in terms of the near-term outlook.

“New order books strengthened to the greatest extent since December 2016, which indicates that construction workloads remain on an upward trajectory.

“Rising demand and tight labour market conditions led to robust job creation, with survey respondents commenting on a larger-than-usual uptake of apprentices in September.

“However, latest data showed that overall confidence about the year-ahead business outlook was among the lowest seen since the start of 2013.

“Construction companies continued to note that political uncertainty acted a key drag on decision-making, with Brexit worries encouraging a wait-and-see approach to spending among clients.”

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