Construction in largest improvement for five months

Construction in largest improvement for five months

The UK construction sector saw its best overall improvement in activity in five months, according to the latest Purchasing Managers Index from Markit and the Chartered Institute for Purchasing and Supply (CIPS).

November's reading of 53.1 was up from 50.8 in October, the second successive month of growth.

However, the increase in output was entirely due to the healthy rise in housing output. This saw continued growth in contrast with commercial construction, which remains in the doldrums amid continued Brexit-related uncertainty. Civil engineering also continued its decline, with activity down for the third month.  

Describing housing as the "primary driver"of growth, CIPS director of customer relationships Duncan Brock noted that the housing statistics were, by contrast, the best for five months. 

The report stated: "House building projects were again the primary growth engine for construction activity. Survey respondents suggested that resilient demand and a supportive policy backdrop had driven the robust and accelerated upturn in residential work."

It is not coincidence that this was the case, according to associate director at IHS Markit and co-author of the report Tim Moore. He observed that the market has been "helped by strong demand fundamentals and a supportive policy backdrop".

The high level of demand is partly a consequence of the lack of homes built in the past, meaning demand exceeds supply. However, the fact is that the actual number of homes being built has been steadily rising since the trough of the financial crisis. Having been down at around 120,000 in the early years of this decade, the number of homes built in England has risen steadily, and recently passed 200,000 over a 12-month period for the first time in almost a decade.

Chancellor of the Exchequer Philip Hammond unveiled a package of support in last month's Budget worth £44 billion to boost house building in the coming years. The government's target is for 300,000 homes a year to be built in England by the mid-2020s.