U.K. Construction Growth Unexpectedly Slows to Seven-Month LowScott Hamilton
U.K. construction growth unexpectedly slowed to a seven-month low in May as commercial and house building moderated in tandem with a cooling property market.
A Purchasing Managers’ Index declined to 60 from 60.8 in April, Markit Economics said today in London. The median forecast of 17 economists in a Bloomberg News survey was for an increase to 61. While the pace of expansion is falling, the gauge has been above the 50 level that signifies growth for more than a year.
“U.K. construction activity has shown signs of moderation from the steep growth seen at the start of the year,” David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said in a press release. “Strong expansion in new business and improving economic conditions reflected particularly well on business optimism and outlook.”
Today’s data, together with a report yesterday showing mortgage approvals fell for a third month in April, suggest an easing in the nation’s real-estate momentum. The market has surged in the past year, sending prices in London to a record and raising concerns that a bubble may be building. Bank of England financial-stability officials are set to meet this month to decide if they need to take action on the potential risks.
An index of housing activity slipped to 62.7 from 63.9, the Markit data showed, while commercial building expanded at the weakest pace for seven months. Sub-contractor availability fell at the sharpest pace since August 1997, while the rates they charge rose at a record pace.
Higher levels of output and incoming new work “contributed to a rise in staffing levels for the twelfth successive month in May,” Markit said in the report. Increased payroll numbers partly reflect strong confidence in the outlook, it said.