Construction firms optimistic about year-end growth

Steve Radley
Steve Radley

Construction firms remain highly optimistic about their business outlook, despite a slight dip in growth momentum last month, the results of a survey of purchasing managers have revealed.

The Markit/CIPS Purchasing Managers Index (PMI) fell to 55.3 in November, a drop on October’s figure, but well above the score of 50 seen to represent growth.

But buyers were overwhelmingly positive about the future state of the sector, with 55 per cent expecting to see a rise in output over the coming 12 months.

By contrast, just 5 per cent reported that they anticipate a fall in productivity during the same period.

Many respondents to the survey, which is sent out to more than 170 construction companies each month, attributed the positive outlook to a raft of public and private-sector tenders expected at the end of the year.

Steve Radley, CITB director of policy, said: “While the latest index points to slower growth in construction output and employment last month, the outlook remains upbeat. Over half of firms (55 per cent) are forecasting growth over the year ahead and only 5 per cent are expecting a fall.

“So there is little from today’s figures to suggest that finding, developing and retaining will not remain a top priority for construction. We are working closely with employers and Government to address this challenge.”

While output in the residential building and civil engineering sectors was up, the star performer was commercial construction, which came top of the growth table for November.

This continues the trend from last month, when a strong performance from the commercial building sector helped to drive up the PMI to 58.8.

Job creation also continued at a strong pace, carrying forward the momentum built up during October, which saw employment levels reach their highest peak since November 2014.

Tim Moore, the senior economist at Markit responsible for putting together the PMI, welcomed the findings, saying they showed the recovery of the construction sector was “down but not out”.

“A healthy flow of new tenders from public and private-sector clients is expected to provide a tailwind to growth heading into 2016,” he said.

“Reflecting this, UK construction firms were again overwhelmingly positive about the outlook for their business activity, while only a small proportion anticipates falling output levels during the next 12 months.”

This month’s reading of 55.3 represented the weakest level of growth since April, when the run-up to the general election caused uncertainty in the market.

It is thought that this was caused by a slowdown in housing activity, which expanded at its slowest rate since June 2013.

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