U.K. construction sector growth loses momentum in January, PMI index falls to 50.6

U.K. construction sector recorded a loss of momentum in the month of January, with business activity growth easing to its softest in 10 months. The headline seasonally adjusted IHS UK Construction Total Activity Index fell to 50.6 in the month from December’s 52.8. All three categories of construction output saw softer trends than those seen in December. Residential work was the most solid performing area, even if the latest growth was just modest and the slowest seen since March 2018. Civil engineering activity rose a bit, with the pace of growth much weaker than December’s 19-month high.

Commercial work was the softest performing area of construction output in January. The latest data showed a fall in work on commercial construction projects for the first time in ten months. Anecdotal evident implied that Brexit-related anxiety and associated worries regarding the domestic economic outlook continued to be a drag on client demand.

New business growth moderated to an eight-month low in January. Construction companies widely commented on weaker demand conditions and longer sales conversion times, reflecting a wait-and-see approach to spending by clients. Worries about the near-term outlook for new projects led to more cautious staff hiring policies at the beginning of 2019. The latest survey indicated towards the slowest rise in employment figures since July 2016.

In the meantime, slower growth of input purchasing aided in reducing pressure on construction supply chains in January. The latest deterioration in vendor performance was the joint-weakest since September 2016. Construction companies also indicated towards the smallest reduction in sub-contractor availability for two-and-a-half years.

Input price inflation continued to ease in January, with average cost burdens rising at the slowest rate since June 2016. Construction companies continue to be positive about the outlook for business activity in 2019. About 41 percent of the survey panel expects a rise in output, while only 16 percent project a fall.

At 11:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bearish at -118.759, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 77.1097. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex