House building pushes UK construction sector growth to seven-month high

Will Green is news editor of Supply Management
2 October 2015

The fastest rise in residential house building for 12 months has pushed growth in the UK construction sector to a seven-month high.

The Markit/CIPS UK Construction Purchasing Managers’ Index hit 59.9 in September, up on 57.3 in August, and against a no-change reading of 50.

House building was the best performing category, which some survey respondents attributed to the launch of projects that had been delayed earlier in 2015, while both the commercial and civil engineering categories expanded.

However, the increase in new work was the slowest for five months, though construction companies remained upbeat about their prospects for the next year.

Subcontractor charges continued to rise sharply, though the rate of inflation eased slightly from the record highs earlier in the year.

There was the least marked deterioration in supplier performance for almost five years, which some firms linked to greater stocks at vendors, and the rate of input price inflation eased to a five-month low.

David Noble, group CEO, CIPS, said: “Issues around skills shortages continued to be a drag on the sector with the resultant demand for higher salaries from the smaller pool of skilled staff. Companies reported higher staffing levels but it was a continuing challenge to find specialist skills as they struggled to rely less on subcontractors to fill the gaps.

“Lower fuel and raw material costs helped margins even in a landscape of strong competition. Levels of output were robust and increased at the fastest pace for over six months.”

Tim Moore, senior economist at Markit, said: “While the latest survey provides positive news on construction output, jobs and supply chains, there was a warning light flashing in terms of total new orders. Construction companies have recorded a steady slowdown in new business growth from June’s post-election peak and the latest upturn was the second slowest since mid 2013.”

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