Brexit latest: Construction grows in February but inflation still strong

The Markit/CIPS Purchasing Managers' Index rose to 52.5, up from 52.2 in January, with any reading above 50 signalling growth

Civil engineering output picked up in February (Getty)

UK construction output remained robust in February but input cost pressures on the industry remained severe according to the latest survey snapshot of the sector.

The Markit/CIPS Purchasing Managers' Index rose slightly to 52.5, up from 52.2 in January, with any reading above 50 signalling growth.

The increase was driven by the civil engineering index, while house building growth fell to its weakest level in six months and commercial construction slipped into contraction territory.

The survey balance for rising input costs was the second highest since August 2008, driven by the 12 per cent plunge in the pound since last June’s Brexit vote.

Still building

“Suppliers’ efforts to pass on rising energy costs and global commodity prices have been amplified by the weak sterling exchange rate,” said Tim Moore, economist at Markit.

Construction output grew by 0.2 per cent in the final quarter of 2016 according to the latest estimate from the Office for National Statistics, following a 0.8 per cent contraction in the third quarter.

Building firms account for around 6 per cent of the UK's output.

The overall economy has held up surprisingly strongly since the Brexit vote due to strong household spending.

But most economists expect a slowdown this year due to rising consumer price inflation crimping families' consumption and a continued drag from delayed business investment due to the Brexit uncertainty for firms.

“With Brexit uncertainty likely to continue to weigh on business confidence and falling real wages set to worsen housing affordability, it remains hard to see the construction’s sector malaise coming to an end this year,” said Samuel Tombs, economist at Pantheon.