Construction industry continues to see growth

Construction industry output increased once again in November according to the latest Markit/CIPS UK Construction PMI figures.

Business activity continued its strong performance from October’s figures.

The construction PMI reading for November was 52.8, up slightly on the previous month score of 52.6 – the third consecutive month of growth.

Respondents noted resilient client confidence and strong demand for residential projects but the industry was still beset with Brexit-related economic uncertainty.

November saw a solid increase in new work, which was at its strongest since March following a severe lull over the summer months.

House building was once again the main performer despite the pace of expansion slipping to a three-month low.

Commercial activity saw a slight increase following a five-month period of decline.

Civil engineering was once again the weakest performing sector.

Construction firms were hit by increased supplier prices as inflation rose at its quickest rate in over five and a half years.

There was no drop off in employment levels in November, while the use of sub-contractors was at the highest levels seen so far this year.

Tim Moore, Senior Economist at IHS Markit commented: “UK construction companies experienced a steady recovery in business activity during November, which continues the rebound from the downturn seen over the third quarter of 2016. The brighter picture reflected another solid contribution from residential building and renewed growth in commercial work, which some companies linked to a resumption of projects that had been delayed after the Brexit vote.

“November’s survey data revealed the strongest rise in overall new business volumes since March. However, lingering economic uncertainty and subdued investor sentiment meant that optimism towards the year-ahead outlook remained close to its lowest since early-2013.

“Input cost inflation accelerated to its fastest for five-and-a-half years, driven by sharply rising imported raw material prices. A number of firms cited uncertainty related to supplier price hikes as an emerging threat to the construction sector, with survey respondents commenting on difficulties forecasting project costs against a backdrop of rapidly changing inflationary pressures.”

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