House building helping UK construction return to growth

(3 minutes to read)

Construction output rises for the first time since January, while residential work expands at the fastest pace for four months.

Umbrella company contractors working in the construction sector will be pleased to learn that April data pointed to a marginal expansion within the industry.

House building was by far the strongest performing area of construction work last month. Latest data revealed a solid expansion of residential work, with the rate of growth reaching its highest since December 2018 – survey respondents reported resilient demand conditions and a strong flow of new buyers.

Commercial work, however, was the weakest area, which continued the trend seen during the first quarter of 2019. A number of firms linked lower commercial construction to Brexit-related uncertainty and delays with client spending decisions.

Tim Moore, Associate Director at IHS Markit, which compiles the survey, said, “A return to growth would normally be considered a positive month for the UK construction sector, but the weakness outside of house building gives more than a little pause for thought. Commercial activity and civil engineering both remained on a downward path in April as political uncertainty led to delays with spending decisions.

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“Residential work retained its position as the sole driver of growth across the three main segments of construction activity. Survey respondents once again noted that residential projects were buoyed by strong demand for new homes, low mortgages rates and first-time buyer incentives.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, added, “Although the sector marginally moved into growth territory in April, there’s a huge question mark over whether there will be any further improvements in the coming months as new orders fell for the first time since May 2018. This lack of pipeline work has made firms more cautious about their hiring strategies with the first fall in employment levels since July 2016 in a bid to curb their rising costs and reduce their excess capacity.”

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