Construction sector sees solid return to growth

After a setback at the start of the year, latest data shows that February saw the UK construction sector experience a solid return to growth.

The recent IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) revealed that residential work remained the strongest area of growth and new order volumes increased for the ninth consecutive month with the rate of expansion accelerating from the subdued pace seen at the start of the year.

These greater workloads saw a rise in job creation within the sector, which although modest, was the fastest since March 2019.

Tim Moore, Economics Director at IHS Markit, which compiles the survey, commented, “Construction work regained its position as the fastest-growing major category of UK private sector output in February. The rebound was supported by the largest rise in commercial development activity since last September as the successful vaccine rollout spurred contract awards on projects that had been delayed at an earlier stage of the pandemic.

“House building is still the engine of recovery for the construction sector, although there was a loss of momentum since January as adverse weather and longer wait times for materials contributed to some temporary delays on site.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, added, “On the one hand, February saw a welcome rise in overall output in the construction sector as commercial projects in particular were woken from their slumber and purchasing levels rose across the board for the ninth month in a row.

“On the other hand, strong demand for products added pressure to already impaired supply chains as sellers battled with raw material shortages, and the costs of business rose at the fastest rate since August 2008. Though delivery times were still deteriorating as port disruptions made their mark, it was to a lesser degree compared to January suggesting the worst of the squeeze due to Brexit may have eased. Supply chain managers found themselves spinning a number of plates with creative ways to get stock including sourcing more local supply for some.

“These ongoing issues did nothing to dampen builder enthusiasm as optimism for the future rose to its highest since October 2015 and this return to confidence lead to job hiring at the fastest rate for almost two years. With part-time furlough options now in place, some constructors will be mixing and matching their approaches to meet the ebb and flow of projects and capacity in the coming months.”

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