Longest period of sustained growth in UK construction sector for seven-and-a-half years

Will Green is news editor of Supply Management
2 September 2015

The UK construction sector “remained in recovery mode” during August as growth ticked higher.

The Markit/CIPS UK Construction Purchasing Managers’ Index reached 57.3 in August, up on 57.1 recorded in July and against the no-change position of 50.

Higher levels of business activity have been recorded in each month since May 2013, representing the longest period of sustained growth in seven-and-a-half years.

The residential sector recorded the fastest pace of expansion, while commercial building growth also accelerated, but civil engineering was the weakest performing area. Survey respondents linked the upturn to improving economic conditions and strong demand from private sector clients.

The survey found encouraging signs that strains on raw material availability have started to subside, with the slowest deterioration in vendor performance for more than three years.

Input cost inflation eased to a four-month low against a background of higher supplier capacity and lower fuel and energy costs.

More than half the survey panel anticipated a rise in business activity over the next 12 months, while only 5 per cent expected a reduction.

There was a robust rate of job creation, with the current period of staff hiring stretching to 27 months, while subcontractor use picked up and their charges rose sharply.

David Noble, group CEO, CIPS, said: “Capacity restraints limited some companies in their determination to actively chase new business, using their resources to fulfil current commitments. Some raw material shortages were still in evidence as suppliers were challenged to get their act together and keep pace.

“Any further obstacles hampering strong progress were around the lack of available skilled staff as subcontractors were still highly sought-after and offered higher wages. But the rise in the level of permanent posts, and employment generally rising for the last 32 months, confirmed an optimism displayed by more than half of the survey respondents.”

Tim Moore, senior economist at Markit, said: “There was some encouraging news in terms of construction materials availability, as firms reported the lowest pressure on delivery times for over three years, helped by rising inventories and a rebound in supplier capacity.”

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