S&P Global/CIPS United Kingdom Construction Purchasing Managers Index (PMI)

UK Markit/CIPS Construction PMI is published by Markit together with the Chartered Institute of Procurement & Supply. The indicator shows the activity level of the construction sector purchasing managers.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's production activities. Purchasing managers are among the first to notice such changes. The sample for the survey is chosen so as to cover the maximum possible number of large companies across the country.

PMI calculation is based on data collected from monthly replies to questionnaires sent to purchasing executives in over 170 UK construction companies that provide the highest contribution to GDP. Managers are asked to characterize current business and economic conditions in the national construction sector. The questionnaire covers the following economic variables:

• General business activity
• House construction activity
• Commercial construction activity
• Civil engineering activity
• New orders
• Employment
• Quantity of purchases
• Suppliers' delivery times
• Input prices
• Work with sub-contractors (activity, availability, rates, quality)
• Near-term future output

The survey participants provide relative estimates: whether figures have increased, decreased or remain unchanged. The index is seasonally adjusted. Individual weights are given to polled companies. Readings above 50 indicate that most of respondents positively characterize current business conditions. Readings below 50 mean worsening of business conditions.

PMI is one of the most popular indexes closely watched by analysts. It provides operational information covering the entire construction sector. It is interpreted as a leading indicator of construction sector activity and inflation. Construction PMI growth is an indication of favorable market conditions and can be seen as positive for the pound sterling growth.