* UK construction growth improves, driven by civil
* But firms grapple with slowing orders, soaring costs
* PMI adds to recent mixed signals around UK economy
* Building supplier Travis Perkins flags caution
* Post-Brexit vote cost pressures starting to impinge on
(Updates with Travis Perkins results)
By Andy Bruce
LONDON, March 2 Growth across Britain's
construction industry picked up slightly in February, driven by
the civil engineering sector, though a slowdown in new orders
and soaring costs added to mixed signals for the economy, a
survey showed on Thursday.
The Markit/CIPS Construction Purchasing Managers' Index
(PMI) edged up to 52.5 from 52.2 in January, above forecasts in
a Reuters poll that had pointed to an unchanged reading.
Growth in housebuilding cooled to a six-month low and
commercial construction contracted for the first time in four
months, but this was outweighed by an improvement for civil
Adding to the uncertain outlook, Travis Perkins,
Britain's biggest supplier of building materials, reported a 67
fall percent in pre-tax profit after a raft of exceptional
charges - and flagged caution around the economy.
"The sharp decline in the value of sterling since June 2016
has created cost pressures on imported goods and materials, and
the expectations for secondary housing market transactions and
growth in the repair, maintenance and improvement market have
weakened," the company's chief executive, John Carter, said.
The PMI showed new orders increased at the slowest pace
since October and construction companies found scant respite
from spiralling price pressures, which increased last month at a
pace just shy of January's 8-1/2-year record.
"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 sector's
malaise coming to an end this year," said Samuel Tombs,
economist at Pantheon Macroeconomics.
Optimism among construction companies declined a little
after hitting a 13-month peak in January.
Construction accounts for around 6 percent of British
economic output, a fraction of the size of the dominant services
industry. Markit is due to publish its PMI for services on
The Bank of England is watching closely for signs of a
slowdown in Britain's economy this year, caused by rising
inflation and weaker spending power among consumers.
However, it has forecast growth of 2.0 percent, stronger
than expected by economists polled by Reuters.
After being wrong-footed by the resilience of British
consumer demand and the housing market after the referendum, it
now expects investment in housing to grow by 3 percent this
year, barely down on 2016's 4 percent growth rate.
(Editing by Toby Chopra)