Construction Growth Rebounds 17 Month High Housebuilding Snapped Back Action May

Soaring housebuilding activity has helped UK construction “snap back into action” at its strongest rate for almost a year and a half in May, official figures suggest.

The seasonally-adjusted Markit/CIPS UK Construction Purchasing Managers’ Index increased to 56 in the fifth month of 2017 – up from 53.1 in April – to show the highest rise of overall business activity for 17 months.

According to a new study, following a seven-month low in March, housebuilding has risen sharply and more rapidly than it has in any other time period since December 2015.

There was also a prolonged rebound in new work and solid rises in civil engineering and commercial building, which rose at its best rate since March 2016.

Job creation increased for the second consecutive month to its highest level since January on the back of rising workloads, while the cost of imported goods remained high, driving up input expenses.

Despite the reading being much weaker than the post-crisis peak seen in January 2014 (64.6), Tim Moore, senior economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: “May’s survey data reveals that the UK construction sector has started to recover strongly from its slow start to 2017.

“A sustained rebound in residential building provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply. Instead, robust labour market conditions, resilient demand and ultra-low mortgage rates appear to have helped accelerate construction on residential development projects in May.

“Civil engineering continued to flourish, helped by a strong pipeline of infrastructure projects. Commercial construction, on the other hand, has slowed due to studies indicating that increased economic uncertainty is preventing customers from spending.

This year’s biggest new business growth is reassuring for the construction sector, according to the most recent survey’s forward-looking features.

It appears that inflation from imported materials has peaked, despite recent increases in building expenses (which have risen by 6–9% in the last six–nine months).

With construction growth leaping to a 17-month high in May, the anxiety produced by the EU referendum looks to be abating, says Duncan Brock, director of customer partnerships at the Chartered Institute of Procurement & Supply.

After a long period of stagnant construction activity, the construction industry re-emerged in May.” “he asserts,

“The unexpected recovery in construction has been felt most acutely in residential housing as builders finally feel able to respond to demand for new homes. The sector has been held back by the rising cost of raw materials but after months of hard discussions with suppliers, input costs are starting to settle.

Production has increased at a rapid pace, placing an enormous strain on building supply networks. Suppliers are straining to meet demand\swhile there is a growing scarcity of contractors to execute jobs.

“After the financial crisis, suppliers may not have the confidence to invest in their capacity until risk aversion has subsided. Only time will tell whether we are experiencing a long awaited rebound in housebuilding.”

Last Updated on December 29, 2021

Indra-Gupta

Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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