News Release - Markit Economics

News Release

Purchasing Managers’ Index®
MARKET SENSITIVE INFORMATION

EMBARGOED UNTIL: 09:30 (UK), July 2nd 2015

Markit/CIPS UK Construction PMI®

Construction sector output growth rebounds to its fastest for four
months in June

Key points: Residential activity remained the fastest growing
 Sharp and accelerated expansion of business area of construction output in June. However, the
acceleration in the headline index since May was
activity driven by a sharp upturn in both commercial and
 Job creation picks up to its fastest recorded so civil engineering activity growth over the month.

far in 2015 Reports from survey respondents suggested that
 Confidence regarding the 12-month outlook improving client demand and strong order books
continued to support output growth in June.
reaches its highest for over 11 years Highlighting this, latest data indicated that overall
growth of new work rebounded for the second
Markit/CIPS UK Construction PMI® successive month to its steepest since October
2014. Anecdotal evidence linked greater new
business volumes to rising client confidence and
improving business conditions across the UK
economy as a whole.

Source: Markit/CIPS Looking ahead, just under two-thirds of the survey
panel (62%) forecast a rise in output over the next
June data signalled a further rebound in 12 months, while only 4% expect a decline. As a
construction sector output growth from the 22- result, the latest survey pointed to the strongest
month low recorded in April. This was highlighted degree of business optimism across the UK
by a rise in the headline seasonally adjusted construction sector since February 2004.
Markit/CIPS UK Construction Purchasing Companies that anticipate a rise in business activity
Managers’ Index® (PMI®) from 55.9 in May to 58.1 over the year ahead generally cited increased
in June. The latest reading was well above the investment spending among clients and robust
long-run survey average (54.6) and pointed to the demand for new residential projects. Moreover,
fastest increase in overall construction activity since survey respondents noted an increase in new
February. invitations to tender across a range of commercial
projects, alongside hopes of new business gains
from forthcoming major infrastructure projects.

Steeper output growth and a surge in business
optimism supported an upturn in job creation across
the construction sector during June. The latest
increase in employment numbers was the fastest
since December 2014. Moreover, strains on sub-
contractor availability persisted in June, although
the latest rise in sub-contractor charges was the
least marked for nine months.

Page 1 of 3 © Markit

Alongside rising staff recruitment, greater UK Construction PMI® by Category of Activity
workloads contributed to a sharp and accelerated
increase in purchasing activity at construction
companies in June. The latest expansion of input
buying was the steepest since February. This in
turn contributed to another marked deterioration in
supplier performance, with lead times lengthening
to the greatest degree since March.

Input price inflation accelerated to a three-month
high. A number of firms linked higher construction
materials prices to stock shortages at vendors.

Source: Markit/CIPS

Comment: Commenting on the report, David Noble, Group
Chief Executive Officer at the Chartered
Tim Moore, Senior Economist at Markit and Institute of Procurement & Supply, said:
author of the Markit/CIPS Construction PMI®, said:
“Construction was on a real high this month with the
“UK construction companies experienced a growth sharpest rise in overall activity since February as the
rebound and surge in business confidence at the sector made up for lost ground since the General
end of the second quarter. Survey respondents cited Election.
robust inflows of new work in June, adding to already
strong order books across the sector. “Client expectations and strong order books were the
recipe for success along with support from a resilient
“Extra workloads and positivity regarding the year- economic environment encouraging positive
ahead outlook meant that job creation accelerated sentiment in the sector and resulting in accelerated
to its strongest so far in 2015. and hastened purchasing activity. Staff numbers
followed suit with boosted levels of employment and
“The extent of the recent rise in construction a larger number of full-time posts. There was a
optimism is partly down to relief that pre-election reduction in the reliance on sub-contractors in
uncertainty has now passed, but it also suggests that particular, as staff hiring gathered speed.
firms are infused with confidence that underlying
demand will continue to recover. “If there was a downside to this upturn it was the
burden on suppliers to keep pace with rising need as
“Scorching hot demand for some construction lead times experienced the greatest lengthening
products placed additional pressure on supply chains since March 2015 and stock levels were depleted
in June, with delivery times lengthening again for a from this higher demand.”
wide range of materials. Meanwhile, another
substantial rise in sub-contractor charges highlighted – Ends –
that persistent skill shortages in the construction
sector are contributing to sharp rises in labour costs
in some areas.”

Page 2 of 3 © Markit

Contact Information:

For economics comments, data and technical queries, please call:

Markit Press Office
Joanna Vickers, Corporate Communications
Telephone +44 207 260 2234
Email: [email protected]

For industry comments, please call:

CIPS
Trudy Salandiak
Tel: +44 1780 761576
Email: [email protected]

Notes to Editors:

Where appropriate, please refer to the survey as the Markit/CIPS UK Construction PMI®.

The Purchasing Managers' Survey is based on data compiled from monthly replies to questionnaires sent to purchasing executives in
over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the
regional and industry contribution to GDP. The survey is based on techniques successfully developed in the USA over the last 60 years by
the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the
economy, being issued on the first working day of each month. The data collected are not opinion on what might happen in the future, but
hard facts on what is actually happening at "grass roots" level in the economy. As such the information generated on economic trends pre-
dates official government statistics by many months.

Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as
appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) and seasonally
adjusted numbers are available to subscribers from Markit. Please contact [email protected]

About Markit
Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk
and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund
administrators and insurance companies. Founded in 2003, we employ over 3,500 people in 10 countries. Markit shares are listed on
NASDAQ under the symbol MRKT. For more information, please see www.markit.com

About PMI
Purchasing Managers’ Index® (PMI®) surveys are now available for over 30 countries and also for key regions including the Eurozone. They
are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for
their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to
www.markit.com/economics.

About CIPS
The Chartered Institute of Procurement & Supply (CIPS) is the world’s largest procurement and supply professional organisation. It is the
worldwide centre of excellence on purchasing and supply management issues. CIPS has a global community of 110,000 in 150 countries,
including senior business people, high-ranking civil servants and leading academics. The activities of procurement and supply chain
professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions
packages to improve business profitability. www.cips.org

The intellectual property rights to the UK Construction PMI® provided herein are owned by or licensed to Markit. Any unauthorised use, including but
not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not
have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or
delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential
damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trade marks of Markit Economics Limited
or licensed to Markit Economics Limited. CIPS use the above marks under license. Markit is a registered trade mark of Markit Group Limited.

Page 3 of 3 © Markit