Construction sector bounces back with strong growth in new orders

Construction Building 480

Recovery in the construction industry continued in June, with the sector seeing the strongest growth rate for seven months.

The Construction Purchasing Managers’ Index showed that new orders among construction firms was also buoyant, rising at the fastest pace since May 2017.

This closely-watched index, compiled by IHS Markit showed activity in the sector rose to a balance of 53.1 in June, up from 52.5 the month before.

This is the third month in the row that the sector has shown growth – represented by a figure over 50.

Markit says this increase was driven by growth in both the residential and commercial property sectors. 

The  number of new hires in the industry is also rising at the fastest pace for a year. Business expectations also rose, but still remains below the level recorded a year ago. 

These figures contrast sharply with activity levels at the start of the year, where the bad weather in February and March was blamed for a serious slump in output. 

But Markit adds that the downside of this increase in output was a longer lead time for getting supplies, and the sharpest increase in input prices since September.  

The Chartered Institute of Procurement and Supply group director Duncan Brook says: “Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects, and hesitancy was swept away.”

Surveyors Naismiths managing director Blane Perrotton adds: “These figures are flattered by comparison to the weak data recorded at the start of 2018. But such solid improvements in both output and new orders reveal some genuine momentum.”

He adds: “In part this is the release of pent-up demand. While optimism is strongest outside London – with the North West, West Midlands and Bristol markets all buoyant – even the capital is starting to see a creeping improvement in sentiment.”

But Perrotton warned that that with the Brexit clock counting down there was “considerable scope” for volatility in this sector in the months ahead.



Housebuilders embrace modular construction: LBG

Housebuilders are investing in modern methods of construction in order to try to boost the number of homes built, new research from Lloyds Bank reveals. More than two thirds (68 per cent) of building firms say they are investing in modular housing, while more than half (56 per cent) are using panelised systems. Around four […]

Chancellor, budget

Government to consult on new-build FTB discounts

As part of the chancellor’s plans to boost house-building in the UK, the government will consult on plans to offer new-build homes at a discount to first-time buyers. The government said it would like to encourage more FTB-led developments. It will consult on a new policy whereby local authorities will be expected to permission land […]

Construction soars under build-to-rent

Almost 96,000 homes have now been launched under the build-to-rent scheme. Some 95,918 homes across the UK have been completed, are under construction or are in planning under the scheme. Of those some 17,001 have been completed. A further 24,012 are under construction and 54,905 in the planning stage. The number of homes within the […]

House prices in Edinburgh and Manchester close gap on London: Hometrack

House prices are rising faster in Edinburgh and Manchester than in any other UK city, according to the latest Hometrack house price index, closing the gap on prices in the capital. Prices in the cities were found to have risen by 7.1 per cent in the Scottish city to an average of £225,300 and 7 […]


News and expert analysis straight to your inbox

Sign up