Markit/CIPS UK Construction PMI released for September

An increase in housebuilding helped the UK construction sector see its fastest growth for seven months in September, with job creation also at a three month high.

Housebuilding increased at its fastest rate for 12 months and helped the UK construction industry achieve its highest growth for seven months, according to Markit and the Chartered Institute of Purchasing & Supply (CIPS) UK Construction Purchasing Managers’ Index (PMI) figures.

UK construction’s PMI rose to 59.9 in September, up from 57.3 in August, higher than the expected figure of 57.5 and well above the growth threshold of 50.

Construction companies reported that projects finally getting underway after being the subject of delays throughout 2015 were a contributing factor to September’s figures.

Commercial construction activity also saw a sharp increase with the pace of growth reaching a seven-month high. Civil engineering activity increased for the fifth month in a row and the expansion rate rose at its fastest since February.

Construction companies are upbeat about the prospects of growth over the next 12 months with 52% forecasting an increase in business, while only 6% predicted a reduction.

Job creation enjoyed “sustained” growth across the construction sector for the 28^th consecutive month, with the pace of recruitment remaining “strong” and rising to its fastest level since June.

Tim Moore, Senior Economist at Markit said: “Construction firms enjoyed a strong finish to the third quarter of 2015, as a sustained rebound in new development projects continued to have an impact on the ground. Moreover, September data suggests that the UK construction sector is still experiencing its most intense cycle of job hiring for at least 15 years, and consequently skill shortages remain a dominant concern across the industry.

“Residential building saw the most decisive momentum shift in September, hitting a one-year high in the process, while commercial development also picked up speed as rising business investment and improving UK economic conditions acted to bolster demand. A growth spurt for civil engineering activity completed the hat-trick of positive news for the main construction sub-sectors in September, helped by robust pipelines of infrastructure work.

“While the latest survey provides positive news on construction output, jobs and supply-chains, there was a warning light flashing in terms of total new orders. Construction companies have recorded a steady slowdown in new business growth from June’s post-election peak and the latest upturn was the second-slowest since mid-2013.”

The news will be a welcome boost for the government who have set a target of building one million new homes by 2020.

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