Confidence among UK builders rises even as pace of recovery slows

Confidence among UK construction companies has surged to its highest level in nine-years even amid mounting evidence that pace of recovery in the sector is slowing.

The unofficial but closely watched Markit/CIPS survey of construction purchasing managers fell to 57.8 in March from 60.1 in February, the lowest reading for three months. Analysts polled by Reuters expected a reading of 59.5.

Tim Moore, senior economist at the survey data company, said the recovery has "lost some of its swagger".

While the reading is still well above the 50 level that separates expansion from contraction, it is below the average of 61.8 for 2014 as a whole.

But when asked about their outlook for business activity over the next year, companies were the most positive since February 2006.

Mr Moore said companies were "highly upbeat" about their prospects for growth, helped by "improving economic fundamentals, strong order books and a healthy pool of new invitations to tender".

While the survey data are still showing a much more positive reading of the industry than official statistics, the slowdown in the index makes the gap less glaring.

David Noble, chief executive at the Chartered Institute of Procurement and Supply, said the sector's recovery is proceeding at a "gentler, quieter pace". With confidence levels at their highest in nearly a decade "though there may be some low-level obstacles still to come, the sector gets the green light as there is evidently belief that the future for the construction sector is a sustainable one".

A number of companies also reported that clients were delaying spending decisions due to uncertainty about the outcome of the UK general election next month.

The most recent data from the Office for National Statistics paint a picture of an industry in contraction, with output down in January by 3.1 per cent compared to the previous year.

But any reading of the state of the industry is complicated because as of December, the official construction numbers lost their designation as national statistics due to concerns about the methodology used to ensure that the impact of inflation is nullified so that data can be compared over time.

The ONS is set to provide an update on May 08 on its review of the statistics.

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