British Construction Activity Grows At Fastest Rate In Four Months

Construction works in the UK grew at the fastest rate in four months during November supported by residential and commercial construction activities.

However, Brexit concerns weighed on the outlook for 2019, according to a survey published on Tuesday (4).

The seasonally adjusted IHS Markit/CIPS UK construction total activity index registered 53.4 in November, up from 53.2 in October, to remain above the crucial 50.0 no-change mark for the eighth successive month. Moreover, the latest reading signalled the strongest rate of business activity expansion since July.

November data pointed to a solid expansion of UK construction output, which was supported by a broad-based upturn in the three sub-categories of activity monitored by the survey.

The growth of new work picked up since October and rising client demand underpinned a robust and accelerated expansion of employment .

The rate of job creation was the fastest since December 2015. However, business confidence remained relatively subdued, with survey respondents noting that Brexit-related concerns had weighed on their growth projections for the next 12 months.

Residential building reclaimed its position as the fastest growing area of construction work in November. The latest rise in house building activity was the strongest for three months. Latest data also pointed to sustained increases in commercial work and civil engineering activity, said IHS Markit/ CIPS UK Construction PMI.

Survey respondents noted that rising client demand continued to boost construction output during November. Some construction firms noted that Brexit uncertainty had held back new order growth, while there were also reports citing delays to public sector spending decisions.

Higher levels of new business contributed to a solid expansion of input buying and rising employment numbers during November. The latest increase in staffing levels was the fastest since December 2015.

Meanwhile, greater demand for construction products and materials contributed to worsening vendor performance. Longer delivery times from suppliers have been reported in each month since September 2010.

Growing demand for construction inputs led to another sharp rise in input prices during November. Survey respondents also commented on higher transportation costs and rising staff salaries. The overall rate of input price inflation was the fastest since June.

Meanwhile, the latest data indicated that business optimism across the construction sector rebounded from the near six-year low seen in October. The latest reading signalled the strongest degree of confidence for three months.

Anecdotal evidence suggested that Brexit-related concerns remained the main factor weighing on business optimism during November.