Housebuilding helps drive construction growth to 17-month high
The latest Markit/CIPS UK Construction Purchasing Managers’ Index, a monthly survey of construction buyers, rose to 56 in May, up from 53.1 in April.
The survey revealed the fastest upturn in residential work since the end of 2015, as well as a sustained recovery in new work, following the soft patch seen during the first quarter of 2017.
Tim Moore, senior economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: “May’s survey data reveals that the UK construction sector has started to recover strongly from its slow start to 2017.
“House building was the key growth driver, with work on residential projects rising at the fastest pace since December 2015.
“A sustained rebound in residential building provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply.
“Instead, strong labour market conditions, resilient demand and ultra-low mortgage rates appear to have helped boost work on residential development projects in May.
“Civil engineering continued to flourish, helped by a strong pipeline of infrastructure projects.
“However, commercial building was trapped in the slow lane amid reports highlighting that heightened economic uncertainty is holding back client spending.
“The forward-looking elements of the latest survey are reassuring for the construction sector, notably the acceleration in new business growth to its strongest so far this year.
“On the price front, while construction costs have ratcheted up over the past six to nine months, the wave of inflation from imported materials now appears to have passed its peak.”
Partnership housing developer Lovell said the figures reflect strong performance for the business in Scotland.
Regional managing director for Lovell in Scotland, Stephen Profili. said: “The residential sector of the industry is continuing to perform strongly and this is reflected in these latest figures and the broad range of projects Lovell is currently working on in Scotland. Increasing costs due to the ongoing weakness of the pound are having an impact but not enough to dampen the generally buoyant housebuilding sector.
“As a business, Lovell remains firmly focused on delivering the housing Scotland needs, with a strong emphasis on building new affordable homes in significant numbers. As various projects approach completion, we’re looking forward to bringing many more new homes to the market over the remaining seven months of 2017 and beyond.”