Construction picked up in November as housebuilding made up for falls in commercial activity

Residential construction work in November led to the fastest rise in construction activity in five months.

Catford Green by Barratt Developments. Image: Barratt Developments
Catford Green by Barratt Developments. Image: Barratt Developments

Commercial and civil engineering activity continue to decline but business optimism has picked up from a near five-year low in October, according to the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index.

House building projects were again the primary growth engine for construction activity. Survey respondents suggested that continued high demand and a supportive policy backdrop had driven what was both a robust and accelerated upturn in residential work.

Commercial construction was the weakest performing area of activity in November, according to the survey, which continued the trend seen for much of 2017 so far.

Some firms noted that Brexit-related uncertainty and the subdued economic outlook had held back spending among clients.

Meanwhile, civil engineering activity fell for the third successive month, which represents the longest phase of decline seen for over four years, although this drop was marginal.

Some survey respondents commented on hopes that forthcoming tender opportunities on infrastructure programmes, particularly energy and transport, would help to support workloads.

Director of customer relationships at the Chartered Institute of Procurement and Supply Duncan Brock, said: "At last the construction sector, has picked its feet up with the biggest overall improvement in five months, underpinned by a moderate rise in new orders, but the strongest since June.

"It appears that policy support and a small recovery in the UK economy has boosted sentiment and encouraged clients to come out of their shells and start building again. The housing sector was the primary driver of growth increasing at the fastest rate for almost half a year.

"However it is private sector companies that need to commit to big ticket spending, with commercial development still underperforming as persistent Brexit uncertainty continues to bite. Concerns over civil engineering in particular are also prevalent with its downward course the longest since 2013 and linked to a shortfall of new tender opportunities.

"Across construction supply chains, delivery times have been under pressure, as materials were in higher demand, while stocks remained in short supply. Lead-times from vendors have now deteriorated in every month for over seven years.

"Overall, the sector showed an incremental improvement, but business optimism was on the rise and up from last month’s five-year low. Perhaps the darkest days are behind the sector with fresh impetus on the horizon for the New Year."

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