Construction output rises at fastest pace for five months

November data from IHS Markit/CIPS has 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 reportedly increased to the greatest extent in five months.

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.

Duncan Brock, director of Customer Relationships at the Chartered Institute of Procurement & Supply, added: “At last the construction sector, has picked its feet up with the biggest overall improvement in five months, underpinned by a moderate rise in new orders, but the strongest since June.

“It appears that policy support and a small recovery in the UK economy has boosted sentiment and encouraged clients to come out of their shells and start building again… 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.”