Construction output rises above expectations, new data shows

The latest figures from the IHS Markit/CIPS UK Construction PMI exceeded market expectations, showing the strongest pace of expansion in the UK construction industry since July.

The index rose to 53.4 in November (where 50 denotes no change in output), rising from 53.2 in October, and significantly higher than the expected measure of 52.5.

Housebuilding was the fastest growing part of the sector, with commercial work and civil engineering also showing significant increases in activity.

The results, which are generated via surveys of construction companies’ purchasing managers, found that these promising results were in spite of challenging conditions. In particular, respondents noted Brexit uncertainty and delayed public spending decisions had restricted activity.

This promising survey outcome follows other impressive construction data from the ONS. Output in Q3 rose by 2.1%, which was driven by a 2.8% increase in new work. Again, private housing was the fastest growing type of work, along with non-housing repair, and maintenance and infrastructure.

The growth is particularly heartening given the tough start the year for UK construction. Poor weather saw a contraction of output in Q1, and output in Q2 only grew 0.8%.

Builders’ Merchants benefited from strong sales figures too, with the latest data from the Builders’ Merchant Building Index showing Q3 growth of 4.2% compared with the same period in 2017. Timber and joinery sales grew by nearly 10%, and the dry weather also boosted landscaping-related product sales.

Time will tell if these positive trends hold out through the remainder of 2018 and beyond - especially with some challenging obstacles facing the industry in 2019.

We’ll keep you up to date on the construction industry’s latest news, challenges and opportunities through 2019 -  for new Integrity Software blog posts, visit our blog homepage here

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