Monday 11 November 2013

Report reveals sixth month of sustained growth for the UK construction industry

Pinnacle Consulting is delighted to hear that the construction industry continues to move forward with confidence, as confirmed by results shown in the latest Markit/CIPS UK construction purchasing managers’ index (PMI). The report revealed the sixth consecutive month of growth by posting a score of 59.4 for October, up from 58.9 in September. Any score above 50.0 indicates growth. 

In recent months it has been the housebuilding sector which has been the strongest contributor to the upturn, but we are now seeing excellent rises in civil engineering and commercial construction activity too. The rate of growth in the commercial sector was the best since April 2012. 

Improvement in UK economy helping confidence
Construction companies reported that output had been boosted by improvements in the UK economic outlook and a corresponding upturn in client spending. Survey respondents also cited better housing market conditions as a key driver of activity growth. 

Employment throughout the sector is rising
Higher levels of new work contributed to an increase in staffing levels during October. The latest upturn in employment levels being the highest for six years. 

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Manufacturers and distributors struggling to meet demand
The survey revealed a strong rise in purchasing activity by construction companies during October, driven by increasing output and new business. The rate of input buying growth was the sharpest since December 2007. However, there were some signs that the upturn in purchasing activity led to strains on stock levels and operating capacity at suppliers. A good problem to have but one that must be resolved for the industry to continue to grow and thrive,

A bright future is ahead
Markit senior economist Tim Moore said: “UK construction output continues to rise like a phoenix from the ashes, with housing, commercial and civil engineering activity all seeing strong rates of expansion at the start of
the fourth quarter.

“Official data showed that the construction sector lived up to the strong billing given by business survey evidence during the third quarter of 2013. Importantly, the latest Construction PMI survey signals that job hiring and input buying are now rising in tandem with greater new business inflows.

“Improved opportunities to tender and a broadening of the recovery beyond housing activity have helped foster confidence in the longer-term outlook for business conditions. Highlighting this, the latest survey indicated that more than four times as many construction firms expect a rise in output over the year ahead as those that anticipate a fall.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply said: "The future is looking bright for the UK construction industry as it soars into the final quarter with its strongest performance in over six years, boosted by a strengthening surge in activity broadening out across all sectors. Housing remains the key driver of the ever-strengthening rebound in October, but with civil engineering and commercial works continuing to bolster their expansion. Particularly impressive is the commercial sector, which registered the fastest rate of growth since April 2012.

"The on-going growth of new business levels, climbing confidence and positive market conditions has resulted in the steepest rise in staffing levels for six years. Caution on employment experienced in the first half of 2013 has now been replaced by rising expectations and a strong belief that growth can be sustained in the year to come.

"With demand picking up, delivery times are lengthening but there is optimism this will lead to a more bullish approach from suppliers, who up until now have been cautious on stock levels. They now have the platform to level out the continuing squeeze on stock availability and operating capacity."



"Image courtesy of Pakorn (Building Construction)/ FreeDigitalPhotos.net".

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