Fastest rise in construction output for four months says CIPS UK


UK construction companies indicated a sharp increase in business activity during November, led by the fastest upturn in commercial work since July as clients continued to boost spending in response to the reopening of the UK economy, according to the latest IHS Markit / CIPS UK Construction PMI.

There were signs that the worst phase of supplier delays may have passed, with the portion of survey respondents citing longer delivery times falling to 47 per cent in November (compared with a peak of 77 per cent in June).

While price inflation persisted and haulage driver shortages added to cost pressures, the latest overall rise in operating expenses was the least marked for seven months.

The headline seasonally adjusted IHS Markit/CIPS UK Construction PMI Total Activity Index signalled a robust and accelerated expansion of overall construction activity. The index has now posted above the 50.0 no-change value for ten consecutive months and the latest reading pointed to the strongest rate of expansion since July. A steeper rise in commercial construction helped offset a sight showdown in house building growth.

Civil engineering was the weakest performing area in November, although the latest rise in activity was the largest since August. Another solid increase in new business volumes helped to boost construction output during November, with this index hitting a three-month high.

Survey respondents mostly noted that improving client demand had led to increased numbers of new enquiries, although some firms suggested that supply constraints had a negative impact on confidence.

Construction firms sought to increase their business capacity in November, as signalled by another steep rise in staffing numbers.

That said, the overall speed of job creation eased to an eight-month low. Sub-contractor usage also increased at a slower pace in November.

The latest survey also indicated that sub-contractor availability decreased to the least marked extent since May.

November data pointed to another robust rise in demand for construction products and materials.

The index measuring overall supplier performance reached it highest level since April, but remained well inside negative territory. Around 47 per cent of the survey panel reported longer lead times in November, while only 4 per cent reported an improvement. Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier performance, although firms noted an improvement in the availability of specific items (especially timber). Around 72 per cent of the survey panel reported an increase in purchase prices in November, while only 3 per cent reported a decline.

The resulting index signalled the least marked rate of cost inflation since April. Rapid price pressures and supply shortages were a factor dampening business optimism in November. Latest data signalled the weakest output growth projections for four months.