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UK construction sector suffers April slowdown on higher costs -S&P/CIPS
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LONDON (Reuters) – Britain’s construction sector in April had its slowest month since January, hit by rising costs and higher interest rates to finance new projects, a survey published on Friday showed.
LONDON (Reuters) – Britain’s construction sector in April had its slowest month since January, hit by rising costs and higher interest rates to finance new projects, a survey published on Friday showed.
The S&P Global/CIPS construction Purchasing Managers’ Index (PMI) slipped to 58.2 from 59.1 in March, which was its joint-highest reading since June 2021.
Economists polled by Reuters had on average expected the index to fall to 58.0.
The wider all-sector PMI, which includes previously released services and manufacturing data, fell to 58.2 from 60.7, also the lowest since January, when Britain faced a wave of Omicron cases of coronavirus.
“The construction sector is moving towards a more subdued recovery phase as sharply rising energy and raw material costs hit client budgets,” Tim Moore, economics director at S&P Global, said.
A measure of prices paid by construction firms was its highest since September last year.
House-building expanded at its weakest pace since September 2021.
Order books were strong, leading to more employment, but growth in demand slowed as borrowing costs rose and business optimism was the weakest since September 2020.
The Bank of England raised its benchmark interest rate to 1.0% on Thursday, its fourth increase since December, and said further hikes were likely to be needed as it sought to counter a surge in inflation which was likely to top 10% later this year.
(Writing by William Schomberg; Editing by Catherine Evans)
Interest rates are the cost of borrowing money, expressed as a percentage of the amount borrowed. They influence economic activity and consumer spending.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The construction sector encompasses all activities related to the building and renovation of structures, including residential, commercial, and infrastructure projects.
The Bank of England's interest rate decisions affect borrowing costs, inflation, and overall economic growth. Changes in rates can influence consumer spending and investment.
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