- Prior 44.5
The downturn in the UK construction sector continues in March, even if at a less marked pace than in February. Of note, residential work remained by far the weakest-performing category.
However, the standout in the report was a rapid acceleration in input cost inflation. That is leading to companies seeing their operating margins come under considerable pressure. Of note, firms reported that the war in the Middle East had pushed up fuel, transportation and raw material prices.
S&P Global notes that:
"UK construction companies indicated a sustained downturn in business activity during March, led by another steep reduction in residential work. A degree of resilience continued in the commercial and civil engineering segments. There were some reports of a turnaround in infrastructure work, especially in the energy sector.
"March data suggested a challenging near-term outlook for construction activity as total new orders decreased at one of the sharpest rates seen over the past six years. Survey respondents commented on fragile consumer confidence and delayed investment decisions in response to the outbreak of war in the Middle East.
"Construction firms also signalled a recalibration of their output growth forecasts for the year ahead. The drop in confidence during March wiped out the steady improvements in business optimism reported since the Autumn Budget. Escalating inflationary pressures, gloomy domestic economic prospects and higher borrowing costs were widely cited concerns in March.
"International shipping delays meant that supply chain performance deteriorated for the first time since last summer. Moreover, fuel surcharges and rising transport costs contributed to a surge in input cost inflation to its highest for more than three years. The month-onmonth acceleration in cost inflation since February was the largest recorded in nearly three decades of data collection."
