Civil engineering drives construction growth

Will Green is news editor of Supply Management
2 November 2018

UK construction growth increased during October, driven by a rebound in civil engineering activity.

Having declined in both August and September, civil engineering activity grew at the strongest pace since July 2017. Housing and commercial construction also expanded, but at weaker rates.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose to 53.2 in October, the second highest level in 16 months. This was up on 52.1 in September and against the no-change reading of 50. A figure below 50 indicates contraction.

However, there was a slower rise in new business volumes, with firms mentioning intense market competition and delayed final decisions from clients. Business expectations fell to almost a six-year low.

Consequently, input purchasing increased more cautiously, at the slowest rate in seven months. Despite this, delivery times for construction products and materials continued to lengthen and firms continued to report stock shortages at vendors.

Cost pressures remained strong, despite the rate in input price inflation falling to a 27-month low, with companies highlighting increased costs for fuel, labour, timber and steel.

Duncan Brock, group director at CIPS, said: “These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes.” 

Trevor Balchin, economics director at IHS Markit, said: “Construction firms continued to raise headcounts at a strong pace, suggesting they are not expecting an imminent contraction in demand. That said, if the new orders and expectations indices remain at current levels or fall further, the employment index could also drift back towards the 50.0 no-change mark.” 

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