Construction output rises at fastest pace for five months, led by housing

There was a moderate rebound in UK construction output, with business activity rising at the strongest rate since June, according to the IHS Markit/Cips UK Construction Purchasing Managers’ Index (PMI).

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.

The 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.

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.

Duncan Brock, Cips director, said: “Overall, the sector showed an incremental improvement, but business optimism was on the rise and up from last month’s five-year low. Perhaps the darkest days are behind the sector with fresh impetus on the horizon for the New Year.”