Construction sector ‘soars ahead’

posted by Charlie Hart
6 October 2020

The UK construction sector experienced the quickest rise in new business since before lockdown, according to the latest PMI. 

Business optimism was at a seven-month high in September, as a steep rise in homebuilding saw fast activity growth. 

The IHS Markit/CIPS UK Construction Purchasing Managers' Index registered 56.8 in September, up from 54.6 in August.

There were varied results across subsectors with the home building emerging as the strongest performing category, where firms registered a sharp expansion in activity for the fourth month in a row. 

Work undertaken on commercial projects also rose strongly, increasing at the quickest pace for over two years, but civil engineering activity fell for the second month running.

Survey respondents noted a release of pent-up demand as new orders rose for the fourth time in as many months, with the increase in demand the strongest since just before the pandemic.

Staff numbers continued to fall in September but the rate of workforce contraction eased to the slowest for seven months. Firms attributed job cuts with the releasing of furloughed workers after restructuring operations.

Cost burdens faced by building companies continued to rise. While the rate of inflation eased, firms noted higher raw material prices amid shortages at suppliers and a sharp deterioration in vendor performance.

Duncan Brock, group director at the CIPS, said: “UK construction took off in September, soaring ahead of both the manufacturing and service sectors in terms of output growth and recording the fastest rise in purchasing activity since October 2015. 

“Fuelled by the easing of lockdown measures, new orders rose for the fourth month in a row and at the quickest pace since the beginning of the year before the pandemic struck.

“For now, builders are stocking up for Brexit and Covid preparations, so purchasing remains strong in spite of longer delivery times and some shortages. Optimism is at a seven-month high, so builders are enjoying this resurgence in activity following the summer lows.”

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