The UK’s dominant service sector, spanning hotels, restaurants, computing and finance, bounced back into growth in October but the rate of expansion remained weak, according to a new survey.
Advertisement
“The final PMI data confirm the steady but still somewhat lacklustre economic growth recorded in the euro area at the start of the fourth quarter”, said Chris Williamson, Markit’s chief economist. The composite PMI came in at 52.6 versus 51.9 in September.
As a result, the latest survey marked two-and-a-half years of sustained output growth across the United Kingdom construction sector.
The sector was driven by an uplift in commercial building, with housing and civil engineering work also expanding but at a slower rate. Commercial building work increased at the sharpest pace for eight months. As the chart below shown, all nations bar Japan, India, Australia and Vietnam saw activity levels contract while China, the largest manufacturer globally, recorded readings of 49.8 and 48.1 respectively depending on which survey you choose to look at.
Looking forward to the next 12 months, 59 per cent of firms surveyed are forecasting a rises in business activity, while only 7 per cent are expecting a decline.
A number of construction firms noted that greater capacity among suppliers had helped to alleviate the pressure on average lead times for raw materials. “Much of the skilled workforce is due to retire in the next five to 10 years and if we can’t train enough new talent to replace them, the construction industry will struggle to deliver the new homes and infrastructure that both the community and the economy badly needs”. The Confederation of British Industry said last week that factory orders suffered their biggest fall in three years in the three months to October.
The latest purchasing managers’ index (PMI) from Markit and the Chartered Institute of Procurement & Supply (Cips) shows a reading of 54.9 for October – up from 53.3 the previous month and the first increase since June.
Advertisement
The rebound in new order growth was highlighted in the latest Markit/CIPS UK Construction PMI index report which also showed the highest rate of construction job creation for almost a year. No other reproduction or distribution is permitted without prior written consent.
