UK construction sector continues sharp growth

Gurjit Degun
3 January 2014

The UK construction market has seen eight months of continuous growth with relatively sharp rises in output, new orders and employment.

The seasonally-adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) reached 62.1 in December, down slightly from 62.6 in the previous month’s 75-month peak, but well above the 50 baseline.

The latest survey found 57 per cent of respondents anticipate an increase in business activity over 2014, compared with 10 per cent expecting a decline.

Residential activity remained the fastest growing area of construction, but it was also the only category to post a slower pace of expansion than in November. Work on commercial projects rose at the steepest rate since August 2007.

Improving business conditions and greater confidence in the economic outlook led to a boost in spending from clients during December. Higher levels of incoming new work have been recorded in each of the past eight months.

Suppliers’ delivery times lengthened sharply at the end of 2013, as increased purchasing volumes placed pressure on stock availability. Strong demand for inputs contributed to a further rise in costs in December.

Tim Moore, senior economist at Markit and PMI author, said: “Stronger growth expectations and fuller order books are continuing to fuel job creation in the construction sector. Higher employment numbers have now been reported for seven successive months, and these efforts to meet a sudden turnaround in UK construction demand should help keep staffing levels moving strongly upwards into 2014.”

CIPS group CEO David Noble added: “The natural consequences of the rapid jump in construction activity during 2013 have been the continued squeeze on stocks at supplier level and the lengthening of delivery times. These pressures, alongside increasing business costs, will remain in 2014, but with hopes that they won’t prolong.”

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