- Kalpana Padhiar, construction specialist at Euler Hermes
Business activity in Britain's construction sector unexpectedly slowed to the lowest level in ten months in February, but remained firmly in expansion territory for the 34th month in a row. The Markit/CIPS UK construction PMI declined to 54.2 in the reported month, down from 55.0 in January, compared with economists projection of 55.5. Housebuilding rose at the slowest pace since June 2013, when the UK economy started to recover, while construction firms hired staff at the weakest rate since August 2013. Optimism among companies about business activity for the year ahead dropped to the lowest level since December 2014. The latest official data showed construction output dropped in the fourth quarter of 2015, and remained 4.1% below the pre-crisis peak. Despite a weaker final quarter, and high volatility in the sector, construction sector performance improved throughout 2015 compared with the preceding year.
The data followed the manufacturing PMI report, which showed manufacturing growth declined to near a three-year low in February due to a drop in new orders. Markit factory index declined to 50.8 last month, down from 52.9 in January, marking the lowest level since April 2013. Markets will now await fresh PMI data on the services sector due on Thursday. Expectations ahead suggest activity slowed slightly in February.
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