Strong July for construction
news28th August 2018
July 2018 was booming for UK construction buyers - being one of their busiest months of the year so far. The month also saw the sharpest rise in industry employment since December 2015.
This latest monthly survey of construction purchasing managers revealed the fastest increase in residential work for around 2.5 years - causing a solid growth in overall activity. Input cost inflation levelled from the nine-month high seen in June, however, supply chain pressures continued.
Overall construction output has grown at the fastest rate since May 2017 - the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) rose from 53.1 in June to 55.8 in July. Higher volumes of new project starts and catch-up from bad weather at the start of the year was mentioned by respondents.
House building has improved significantly, and was the best category of construction activity in July. Commercial work experienced the quickest growth in 2.5 years. Civil engineering showed only a slight increase in activity, though this is an improvement on June.
Construction companies expressed that it was difficult to find work to replace completed railway infrastructure projects, which in turn, could have contributed to the lack of growth in the sub-sector of civil engineering.
Respondents commented on a positive upscale in client demand. In fact, the data showed that the construction sector experience the strongest increase in total new orders since May, 2017. Despite this, companies appear to be cautious about the business outlook for the year ahead - the degree of positivity towards workloads in the future has remained weaker than the overall survey average. It is believed that Brexit could be contributing to the lack of business optimism in July.
Associate director at IHS Markit and author of the IHS Markit/CIPS Construction PMI, Tim Moore, commented: “July data reveal an impressive turnaround in the performance of the UK construction sector, with output growth the strongest for just over one year.
"While the recent rebound in construction work has been flattered by its recovery from a low base earlier in 2018, there are also signs that underlying demand conditions have picked up this summer. New business volumes expanded at the strongest rate since May 2017, while workforce numbers increased to the greatest extent for just over two-and-a-half years.”
Written by Ian Johnson