Housebuilding boost to activity
A solid expansion of UK construction output was supported by a broad-based upturn in the three sub-categories of activity monitored by the IHS Markit/Cips UK Construction Total Activity Index, which registered 53.4 in November, up from 53.2 in October, to remain above the 50.0 no-change mark for the eighth successive month.
Growth of new work picked up since October and rising client demand underpinned a robust and accelerated expansion of employment. The rate of job creation was the fastest since December 2015. However, business confidence remained relatively subdued, with survey respondents noting that Brexit-related concerns had weighed on their growth projections for the next 12 months.
Moreover, the latest reading signalled the strongest rate of business activity expansion since July.
Residential building reclaimed its position as the fastest growing area of construction work in November. The latest rise in house building activity was the strongest for three months. Latest data also pointed to sustained increases in commercial work and civil engineering activity.
Survey respondents noted that rising client demand continued to boost construction output during November. The rate of new business growth picked up since October, but remained softer than seen on average in the third quarter of 2018. Some construction firms noted that Brexit uncertainty had held back new order growth, while there were also reports citing delays to public sector spending decisions.
Higher levels of new business contributed to a solid expansion of input buying and rising employment numbers during November. The latest increase in staffing levels was the fastest since December 2015. Meanwhile, greater demand for construction products and materials contributed to worsening vendor performance. Longer delivery times from suppliers have been reported in each month since September 2010.
Growing demand for construction inputs led to another sharp rise in input prices during November. Survey respondents also commented on higher transportation costs and rising staff salaries. The overall rate of input price inflation was the fastest since June.
“Levels of new work improved, and employment numbers increased at their fastest rate since December 2015, as projects finally started after sustained periods of delay,” Duncan Brock, group director at the Chartered Institute of Procurement and Supply, said. “But before the champagne corks start popping, this rise in the overall index was small. Even with optimism at a three-month high, there is currently no indication that this will become a sustained rise as we approach the end of the year.”