Construction output rises at fastest rate in four months


Construction buyers reported the fastest rise in output seen in four months in November with commercial work leading the way.

Construction Output reported that the bellwether IHS Markit/CIPS UK Construction PMI Total Activity Index hit 55.5 in November – up from 54.6 in October.

Supplier issues may have eased

construction site, bricksThere were also signs that the worst phase of supplier delays, which Advantage has written about more than once in recent months, may have passed, with the portion of survey respondents citing longer delivery times falling to 47% in November compared with a peak of 77% in June.

A steeper rise in commercial construction (index at 56.5) helped offset a slight slowdown in house building growth (54.7, down from 55.4).

UK construction enjoyed a rebound in November

Civil engineering was the weakest-performing area in November (53.9), although the latest rise in activity was the largest since August.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said:

“UK construction enjoyed a rebound in November with the fastest level of output growth for four months as supply chain managers increased their purchasing activity to meet a strong pipeline of new building projects.”

Signs of a recovery in supply chain performance

He stated:

Housebuilding returns construction sector to growth in April“Adding to this positivity was signs of recovery in supply chain performance with just 47% of construction firms reporting longer waiting times, which is the smallest number for eight months.

“Even with this glimmer of hope that the pressure on deliveries was easing, purchasing remained at a higher level to counteract disruptions from ongoing driver shortages and port delays as supply chain managers bought more than their immediate need.

“Job hiring growth was still maintained in November but was the weakest since March. Builder optimism was somewhat flat as the costs of building still remained high
and firms struggled to stay competitive.”

Rise in purchasing costs was the slowest since April

Tim Moore, Director at IHS Markit, which compiles the survey said:

“Input price inflation remains extremely strong by any measure, but it has started to trend downwards after hitting multi-decade peaks this summer.

“The latest rise in purchasing costs was the slowest since April, helped by a gradual turnaround in supply chain disruption and a slight slowdown in input buying.”

Advantage’s view: Encouraging data for the construction industry in 2021 is nothing new. However, what is interesting to note is the resurgence of commercial work (housebuilding had previously been the most buoyant part of the construction sector). Also, analysts will be watching the supply chain situation keenly to see whether the possible early signs of recovery prove to be sustained.

Do you require a structural warranty for your project? The Advantage team is proud to work with clients on developments throughout the UK to ensure that projects are covered by the appropriate structural warranty. To find out more, call: 0845 900 3969 or email: sales@ahci.co.uk

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