UK construction companies reported a return to business activity growth during February, following a nine-month period of declining workloads according to latest IHS Markit/CIPS UK Construction Total Activity Index. The survey warned of the potential impact of the coronavirus despite the sharpest rise in new orders since December 2015. Anecdotal evidence mainly linked the recovery to a post-election improvement in business confidence and pent-up demand for new projects.
At 52.6 in February, up from 48.4 in January, the headline seasonally adjusted UK Construction Total Activity Index registered above the 50.0 no-change value for the first time since April 2019. Moreover, the latest reading signalled that the overall rate of construction output growth was the fastest for 14 months.
The is potential uncertainty coming from the impact of the coronavirus outbreak on UK economic growth prospects. A renewed slowdown could see domestic investment spending put back on hold and dampen the outlook for the UK construction sector.”
Tim Moore, Economics Director at IHS Markit, which compiles the survey, said: “Growth of business activity was stronger than at any time since the end of 2018, supported by the fastest rise in new orders for just over four years. Some construction firms suggested that the recovery in output would have been even stronger had there not been disruptions on site from severe weather conditions in February.
“There were widespread reports that pent-up demand released since the general election had helped to boost workloads, especially in relation to house building and commercial construction projects. Civil engineering activity moved another step closer to stabilisation
in February. A number of survey respondents commented that contract awards from HS2 and other major transport projects had the potential to boost infrastructure work at their businesses in the year ahead.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “Purchasing levels rose at their fastest rate for over a year across the construction sector meaning unprepared suppliers bore the brunt of the upsurge. Their performance deteriorated again this month as delivery times and stocks of raw materials came under pressure.
“Should there be another sudden rise in purchasing activity in March, we are likely to see more challenges in supply chains, until suppliers have a chance to catch up. Given the slowdown in the global economy and potential coronavirus impacts, the sector could struggle to maintain February’s strong performance and may experience slower progress as we head into spring.”