Construction orders rise but confidence is subdued - Supply Management

Construction orders rise but confidence is subdued

Will Green is news editor of Supply Management
3 January 2018

Growth in the UK construction sector slowed in December though new orders rose at the fastest pace in seven months.

The IHS/Markit CIPS UK Construction Purchasing Managers’ Index eased to 52.2 in December, down on 53.1 in November and against the no-change reading of 50.

Data pointed to resilient demand for new construction projects, highlighted by the fastest upturn in new orders since May and reports of an improved flow of inquiries and an increase in clients’ willingness to commit to new work.

Purchasing activity also increased in December, with the upturn the steepest for two years, while robust demand for products and materials contributed to another sharp lengthening of suppliers’ delivery times.

Cost pressures persisted across the sector, with survey respondents noting higher prices for blocks, bricks, insulation and roof tiles, alongside continued rises in the cost of imported products.

House-building remained the key engine of growth, with a moderate fall in commercial construction and a stabilisation in civil engineering, which had experienced a three-month period of decline.

Despite the rebound in new order volumes firms indicated a subdued degree of optimism regarding the business outlook for the next 12 months.

Duncan Brock, director of customer relationships at CIPS, said: “It appears that the continued fall in commercial activity was testament to Brexit-related uncertainty on the horizon and the sector’s fear about the direction of the UK economy as clients still hesitated to spend on bigger projects.”

Tim Moore, associate director at IHS Markit, said: “Exactly 37% of the survey panel forecast a rise in construction activity over the course of 2018, while around 11% anticipate a reduction. As a result, the balance of UK construction companies expecting growth in the year ahead remains among the weakest recorded by the survey since mid-2013.”

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