Construction buyers report surge in workloads despite rising costs

Building Site ShutterstockConstruction activity hit a nine-month high in November but average cost burdens rose sharply, with the rate of inflation the steepest since April 2011.

The Markit/CIPS UK Construction PMI ticked-up to 52.8 in November from 52.6 in October.

Any reading above 50 represents a growing market.

Commercial work improved for the first time in six months but input cost-inflation raced ahead to a five-and-a-half year high.

Tim Moore, senior economist at IHS Markit, said construction companies were continuing to rebound from the downturn seen in the third quarter of this year.

“The brighter picture reflected another solid contribution from residential building and renewed growth in commercial work, which some companies linked to a resumption of projects that had been delayed after the Brexit vote.

“November’s survey data revealed the strongest rise in overall new business volumes since March.

“However, lingering economic uncertainty and subdued investor sentiment meant that optimism towards the year-ahead outlook remained close to its lowest since early-2013.”

Housebuilding activity was the best-performing area of the construction industry despite the pace of its expansion easing back to a three-month low.

Commercial activity ended a five-month slowdown to muster up a marginal rebound, while civil engineering remained the weakest area of activity.

Construction firms were also boosted by a number of projects put on ice after the Brexit vote coming back on stream.

But while the sector continued to take on more staff, business confidence was softer than during the first half of the year, as Brexit uncertainty remained at large.

David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply, said: “The sector was on a firmer footing this month, as a slight uptick in overall activity and the strongest level of new business growth since March, resulted in more stability after a summer of uncertainty at the time of the EU vote.

“Purchasing activity grew at its fastest pace since the beginning of the year as stronger workflows and tenders materialising into actual projects prompted increased levels of stock building.

“This resulted in a sluggish response from suppliers, with the fastest lengthening of delivery times since June, as pressure on capacity and low stocks impacted on demand.

“The impact of the weaker pound was widely felt in November, with cost inflation the strongest since early 2011.

“Higher prices were reported for a number of materials including bricks, blocks and slate, as businesses struggled with managing costs.

“Yet, in spite of this grip on precious margins, headcounts were increased and demand for subcontractors was also sustained.”

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