Construction output rises at fastest rate for six years

Will Green is news editor of Supply Management
4 November 2013

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Construction output has risen at its fastest rate for more than six years, driven mainly by the growth in house building.

 

The seasonally-adjusted Markit/CIPS Purchasing Managers’ Index hit 59.4 in October, up from 58.9 in September, and against a baseline of 50, which indicates no change.

 

The survey showed output growth topped August’s recent peak and the pace of growth was the steepest since September 2007.

 

Residential housing was the sector’s area of strongest performance, but there were “robust” rises in civil engineering and commercial activity. The expansion in new business continued for the sixth consecutive month, though the latest rise was not as marked as August’s peak.

 

Higher levels of new work led to increased staffing levels in October, while 52 per cent of respondents predicted a rise in output over the next 12 months.

 

There was a “strong rise” in purchasing activity during October and the rate of input buying growth was the sharpest since December 2007. As a result, there were some signs of strains on stock levels and operating capacity at suppliers, with lead delivery times “lengthened markedly”, a deterioration in vendor performance and higher prices.

 

Tim Moore, senior economist at Markit, said: “Improved opportunities to tender and a broadening of the recovery beyond housing activity have helped foster confidence in the longer-term outlook for business conditions. Highlighting this, the latest survey indicated that more than four times as many construction firms expect a rise in output over the year ahead as those that anticipate a fall.”

 

CIPS group CEO David Noble said: “With demand picking up, delivery times are lengthening, but there is optimism this will lead to a more bullish approach from suppliers, who have been cautious on stock levels. They now have the platform to level out the continuing squeeze on stock availability and operating capacity.”

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