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British construction grows more slowly, costs soar: PMI
[LONDON] Britain's construction industry grew last month at the weakest rate since August against a backdrop of rocketing costs linked to the Brexit vote, but builders were more upbeat about the year ahead, an industry survey showed on Thursday.
The Markit/CIPS construction purchasing managers' index (PMI) hit a five-month low of 52.2 in January after December's nine-month high of 54.2, a steeper decline than all forecasts in a Reuters poll, though still indicating modest growth.
The index also showed the sharpest rise in costs since August 2008, as sterling's slide since the referendum decision in June to leave the European Union pushed up the price of imported raw materials.
The surge in price pressures echoed a record rise in raw materials costs reported by manufacturers in a similar survey on Wednesday. "There were more positive trends in terms of staff hiring and business optimism regarding the year-ahead outlook," Markit economist Tim Moore said.
The Bank of England is expected to revise up its growth forecasts, and possibly those for inflation too, when it gives a quarterly economic update later on Thursday.
Construction firms reported a boost to their workloads thanks to Britain's resilient economic growth since the referendum and a strong pipeline of new projects, Mr Moore said.
The Royal Institution of Chartered Surveyors had a similar message in a separate survey also released on Thursday.
A growing majority of firms expect output to increase over the coming year, led by hopes of more road and railway building, RICS said.
Finance minister Philip Hammond promised more spending on transport infrastructure in a budget statement in November. He set aside 23 billion pounds (US$29 billion) to spend on boosting economic productivity over the next five years.
Official construction data has been more lacklustre than the PMI surveys, with output in the last three months of 2016 just 0.8 per cent higher than the previous year.