The persistent decline in UK construction activity eased at the start of the year, benefiting from a reduction in political uncertainty that boosted client demand and improved sentiment in the sector.
The IHS Markit/Cips UK construction purchasing managers’ index rose to an eight-month high of 48.4 in January from 44.4 in December, and higher than the 46.6 expected by economists polled by Reuters.
A reading below 50 indicates a majority of businesses reporting falling output compared to the previous month.
“The construction sector downturn lost intensity in January amid slower reductions in house building, commercial work and civil engineering activity,” said Tim Moore, economics associate director at IHS Markit.
Housing was the best performing sector while commercial activity decreased for the 13th consecutive month in January, but the rate of contraction was much weaker than in December and the softest since the start of 2019.
Survey respondents widely commented on a boost to client demand from easing political uncertainty, according to the report, while optimism among construction companies rose to the highest level since April 2018.
The construction purchasing managers’ index comes a day after the index for manufacturing showed business conditions in that sector had stabilised in January after a year of high volatility linked to Brexit uncertainty.
Incoming economic data is being closely tracked to monitor the impact of the UK’s official departure from the EU on January 31 as well as the effect of the decisive December general election result on business and consumer spending and investment.
