UK housebuilding growth slows as outlook jitters weigh on sector

http://www.theguardian.com/business/2014/nov/04/uk-housebuilding-growth-slows-october

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UK housebuilding grew at the slowest rate in a year last month in the latest sign of a cooling housing market.

Slower residential building pushed growth in construction output to a five-month low, according to the Markit/Cips construction purchasing managers’ index (PMI).

The housebuilding measure of the PMI dropped to 61 in October, the lowest since October 2013. The headline index of construction output dropped to a five-month low of 61.4, down from 64.2 in September, falling short of City expectations of about 63.5. A figure above 50 indicates expansion.

“October’s survey provides the first indication that the chill winds blowing across the UK housing market have started to weigh on the booming residential building sector,” said Tim Moore, senior economist at Markit.

“Housebuilding activity still increased at a strong pace overall, but the sharp growth slowdown since this summer reflects greater caution towards new development projects amid tighter mortgage lending conditions and renewed uncertainties about the demand outlook.”

Meanwhile, Persimmon, Britain’s biggest housebuilder by market value, said a shortage of workers with joinery and bricklaying skills was limiting the number of homes it could build. The company expects to construct more than 13,000 homes this year, 20% more than last year, but said it was prevented from an even bigger increase.

“With the volume increases we’ve been achieving, it’s naturally putting a strain on the trades that are available,” the chief executive, Jeff Fairburn, told Reuters. “The turnover … is very quick and we’re struggling to put more stock on the ground.”

PMI measures of commercial construction and civil engineering also indicated slowing growth, as did employment.