Pent-up demand brings boost to UK construction industry

Pent-up demand to start building projects burst through in September and led to the fastest increase in new construction business since before lockdown, according to new data.

The rise was offset by a fall in civil engineering projects not yet recovering, but was enough to speed up the growth of the entire UK construction sector, the latest IHS Markit/CIPS UK Construction purchase managers’ index (PMI) shows.

September recorded a PMI score of 56.8 – anything above 50 is seen as a sector in growth – beating the 54.6 recorded for August on the closely-followed index.

Coronavirus – Tue Aug 11, 2020
Coronavirus – Tue Aug 11, 2020

Eliot Kerr, economist at IHS Markit, which compiles the survey, said: “There were faster increases in activity in both the housing and commercial sub-sectors, which more than offset a sharper decline in civil engineering work.

“Forward-looking indicators point to a sustained rise in activity, with new work increasing at the quickest pace since before the lockdown and sentiment towards the 12-month outlook at its strongest for seven months.”

There was a fall in employment in the sector, although the survey found that the rate of job-shedding slowed substantially.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said the construction sector outperformed the manufacturing and services industries, increasing purchasing activity by its fastest levels in five years.

“Fuelled by the easing of lockdown measures, new orders rose for the fourth month in a row and at the quickest pace since the beginning of the year before the pandemic struck,” he said.

“Of the three monitored sub-sectors, house-building was the strongest performer, with activity increasing for the second month in a row, partially driven by residential-related services such as home improvements.

“However, civil engineering took another backwards step and progress worsened significantly as bigger construction developments stayed in suspended animation.”

Optimism is at a seven-month high and builders are enjoying the resurgence in activity following the summer lows, Mr Brock added.