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UK construction sector peps up unexpectedly in October

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© Reuters. FILE PHOTO – Workers standing on scaffolding in a London residential building, Britain, February 7, 2016. REUTERS/Toby Melville

LONDON (Reuters – Britain’s slowdown in construction has been slightly lessened by problems with global supply chains and labour shortages here at home. The result was a slight improvement to growth, which had fallen from an eight month low.

CIPS UK Construction Purchasing Management Index (PMI), which IHS Markit/CIPS UK rose to 54.6 in Oct from 52.6 September. This was the lowest reading since January. An economist poll by Reuters had indicated that the number of people who saw it fall to 52.0.

There were many reports of staff and material shortages that disrupted site work. Rising fuel prices and rising energy prices also added pressure to costs. Tim Moore, IHS Markit’s economics director, said that the worst stage of the supply crunch might have ended.

According to the survey, 54% of construction firms reported delays by suppliers, compared with 63%. However, growth was faster across all sectors (housing, civil, and commercial).

This was in addition to indications ahead of Thursday’s Bank of England interest decision. A similar survey of service companies showed a pickup in growth on Wednesday.

The Royal Institution of Chartered Surveyors conducted a separate survey that showed high orders, especially for projects in infrastructure. However, construction companies struggled to meet rising costs and skilled shortages during the third quarter.

IHS Markit’s survey found widespread cost-related increases in construction companies between October and June, although only to a small extent over the six month period.

All-sector PMI (a composite reading of the week’s construction, manufacturing and services surveys) rose to 57.5 in October from 54.7 in September.

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