Markit/CIPS UK Construction PMI released for December

UK construction industry bounces back in December.

The UK construction industry rebounded robustly in December after November’s weak performance according to the latest Markit and the Chartered Institute of Purchasing & Supply (CIPS) UK Construction Purchasing Managers’ Index (PMI) figures.

UK construction’s PMI increased to 57.8 up from November’s seven month low of 55.3, well above the 50.0 threshold for growth.

Commercial construction was the strongest performing sector, seeing the fastest upturn since October 2014, with a strong demand for commercial projects reported.

In a boost to the government, housing activity increased strongly after the disappointing 29-month low seen during November.

The housing results come on the back of Prime Minister David Cameron’s announcement yesterday that Downing Street will directly commission the building of thousands of new affordable housing.

This will be a major boost to the government as November’s disappointing figures followed the Chancellor George Osborne’s Autumn Statement outlining plans to tackle the crisis of ownership.

In a contrast to the strong performances seen across the construction industry, Civil engineering activity saw a marginal drop after a seven-month run of sustained growth.

Tim Moore, Senior Economist at Markit commented: ““UK construction companies finished 2015 in a positive fashion, as overall output growth recovered from November’s seven-month low. Commercial building was the main engine of growth, with this area of activity expanding at the strongest pace since autumn 2014. There was also a rebound in house building activity in December, but momentum was still much softer than the post-crisis highs achieved during 2014.

“Civil engineering remained the weakest performing area of construction in December. Nonetheless, civil engineering activity looks set to experience a near term spike at the turn of 2016 from spending related to flood relief and additional capital budgets. In the immediate aftermath of the winter 2013/14 floods, UK civil engineering activity picked up at a survey record pace.

“Across the UK construction sector as a whole, the latest survey indicated a strong degree of optimism about the outlook for 2016, with firms mainly citing a strong pipeline of commercial development projects and new housing starts. There were also reports that sustained improvements in UK economic conditions had led to upbeat expectations for clients’ budget setting for the year ahead.”

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