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Jobs and commercial building holding up as 2018 comes to an end

news

9th October 2018

A recent monthly round up of construction industry purchasing managers survey revealed that commercial building was the top performing area in construction in August, while residential work came up a close second.

However, it wasn’t all so positive, with expansion of housing activity falling to its weakest since March and engineering workload dropping for the first time in 5 months - this is believed to be due to a lack of new projects in infrastructure.

Overall, the data showed a slowdown in output growth across the construction sector. Positive aspects of August’s review included an increase in employment and growth in new business, which both managed to hold onto the peak levels seen in July.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) dropped from July’s high of 55.8 to 52.9. However, the good news is that it remained above the essential 50.0 no-change mark.

The rate of expansion in the construction output was the weakest since May. Resilient client demand and supportive economic conditions were blamed, though reports of uncertainty surrounding Brexit also appeared to hold back investment spending.

Overall workloads meant there were higher recruitment levels across the sector, with skills shortages to fill vacancies also being reported.

For the eleventh month in a row, purchasing activity increased - however, this rise was the weakest since March. Delivery times on products and materials were strained due to low stock and labour shortages. Supplier performance deteriorated once again, and August showed the greatest decrease in 3 and a half years.

Tim Moore, associate director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, said: “There are some encouraging takeaways from the latest survey, especially the resilient degree of new business growth in August and a strong upturn in staff recruitment.

"Survey respondents noted that they are confident about achieving organic growth at their businesses in the coming 12 months. The degree of optimism reported in August remained constrained by external factors, including domestic political uncertainty, stretched supply chains and shortages of suitably skilled labour.”

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