November data
pointed to a moderate rebound in UK construction output, with business activity
rising at the strongest rate since June.
New orders and
employment numbers also increased to the greatest extent in five
months.
However, the
improvement in construction growth was largely confined to residential work.
The latest survey revealed sustained reductions in commercial building and civil
engineering, with the latter now experiencing its longest period of decline
since the first half of 2013.
Adjusted for
seasonal influences, the IHS Markit/CIPS UK Construction Purchasing
Managers’ Index (PMI) picked up from 50.8 in October to 53.1 in November, to
remain above the 50.0 no-change value for the second month running.
The latest reading
was the highest for five months and signalled a solid rate of business activity
growth across the construction sector.
House building
projects were again the primary growth engine for construction activity. Survey
respondents suggested that resilient demand and a supportive policy backdrop
had driven the robust and accelerated upturn in residential work.
Commercial
construction was the weakest performing area of activity in November, which
continued the trend seen for much of 2017 so far.
Some firms noted
that Brexit-related uncertainty and the subdued economic outlook had held back
spending among clients.
Meanwhile, civil
engineering activity fell for the third successive month, which represents the
longest phase of decline seen for over four years. That said, the latest drop in
work on civil engineering projects was only marginal. Some survey respondents
commented on hopes that forthcoming tender opportunities on infrastructure
programmes (particularly energy and transport) would help to support workloads.
Construction
companies indicated a moderate rebound in new orders in November, with the rate
of expansion the fastest for five months.
Anecdotal evidence
cited a general improvement in client demand after the soft patch this summer.
Higher levels of new work helped to support a moderate rise in staff numbers
and input buying in November. Lead-times for construction products and materials
lengthened sharply, linked to pressure on supplier capacity.
However, cost
inflation eased to its least marked for 14 months, with some firms reporting signs
that exchange-rate driven price rises had started to lose intensity. Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, said: "UK construction companies experienced a solid yet uneven improvement in business conditions during November.
"Once again,
resilient house building growth helped to offset lower volumes of commercial work and
civil engineering activity.
“Survey respondents
noted that residential projects underpinned the rebound in total new order
growth to its strongest since June, helped by strong demand fundamentals and a
supportive policy backdrop.
“Construction firms
reported that heightened economic and political uncertainty continued to hold
back commercial development activity. The latest drop in civil engineering was
linked to a recent lack of tender opportunities for infrastructure-related projects.
“Business optimism
across the construction sector remained relatively subdued, but picked up from
the near five-year low seen in October. This represented the first improvement
in confidence for three months, which construction firms attributed to
increased sales enquiries and hopes that risk aversion among clients will recede over
the course of next year.”
