Latest PMI data has signalled another sharp increase in UK construction activity at the end of the third quarter. The expansion came amid the sharpest rise in new business since before the pandemic-induced lockdown, with firms increasing their purchasing activity at the quickest pace for nearly five years. Meanwhile, employment has continued to fall, but the rate of job shedding eased.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index (PMI) registered 56.8 in September, up from 54.6 in August. The latest reading pointed to a reacceleration in the rate of activity growth and a sharp increase overall.
Eliot Kerr, Economist at IHS Markit, which compiles the survey: “Following August’s slowdown, growth in UK construction activity rebounded strongly in September. There were faster increases in activity in both the housing and commercial sub-sectors, which more than offset a sharper decline in civil engineering work.
“Forward-looking indicators point to a sustained rise in activity, with new work increasing at the quickest pace since before the lockdown and sentiment towards the 12-month outlook at its strongest for seven months.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “UK Construction took off in September, soaring ahead of both the manufacturing and service sectors in terms of output growth and recording the fastest rise in purchasing activity since October 2015.
“Government support schemes are winding down, so the bigger worry remains levels of job creation. With another drop in employment numbers, vacancies were sparse and further redundancy schemes could be on the cards once this pent-up demand for work is satisfied.”
Meanwhile, cost burdens faced by building companies continued to rise. That said, the rate of inflation eased for the first time in six months to the weakest since May. Panellists often noted higher raw material prices amid shortages at suppliers, with data indicating another sharp deterioration in vendor performance.
Confidence towards the 12-month business outlook was the strongest since February. Optimism was supported by expectations of a sustained rise in new work.
Kate Kirby, Partner at legal business, DWF, said:”Today’s figures show a sharp increase in UK construction activity at the end of the third quarter, due to pent-up demand in new business. In a post–pandemic world, there will still be a requirement for more homes, urban regeneration, improved infrastructure, improved offices, retail space and more distribution facilities. We all know from past downturns that a robust construction sector will emerge but how and when, we just do not know.”