UK construction growth rises through October

UK construction growth has risen through October, thanks in part to an upturn in civil engineering activity.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose in October to 53.2. This was up on the 52.1 reported in September and against the no-change reading of 50. For the uninitiated, a figure below 50 indicates contraction.

Having dropped off somewhat through August and September, civil engineering activity grew at its quickest pace since July 2017. Housing and commercial construction also expanded, albeit at a slower rate. New business volumes rose more slowly however, with construction firms citing intense competition and delayed decisions from clients as the root causes. Worryingly, business optimism fell to a near six-year low.

Understandably, input purchasing increased more cautiously – at its slowest rate in seven months. And yet, delivery times for construction products and materials continued to stretch, with firms reporting stock shortages at builders’ merchants.

Trevor Balchin, Economics Director at IHS Markit, said: “Although total UK construction activity rose at a stronger pace in October, the underlying survey data paint a less rosy picture for the sector towards the end of the year.”

According to Balchin: “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.”

Duncan Brock, Group Director at CIPS, added: “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.”

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