Construction output showed a “strong and accelerated rise” during August, led by the largest rise in commercial work for five months.
Last month, business activity and employment in the UK construction sector both increased, according to the Markit/Chartered Institute of Purchasing & Supply Purchasing Managers’ Index.
Higher levels of commercial activity have now been recorded each month since May 2013, the longest period of sustained growth in more than seven years. Despite this, the index showed a slower rate of increase in 2015 than in 2014.
Increased workloads and upcoming projects aided in job creation. For the first time in the survey’s nine-year history, employment has increased for 27 consecutive months. As a result, the usage of subcontractors has accelerated to its highest level since February of last year.
Residential development experienced the fastest total gain in August. There was a significant increase in commercial work from March’s pace, as well. Increased demand from private sector clients and a strengthening economy were cited by respondents as reasons for the uptick.
The index’s three-month growth average was the smallest for civil engineering, the weakest of the three industries tracked.
Overall, new business was strong, but the rate of growth slowed to its lowest level since May. Companies were, though, largely positive about underlying market conditions and prospects to tender. Some firms indicated that a shortage of capacity had limited their ability to take on new work and, in some circumstances, had made them more choosy regarding development prospects.
In August, overall price inflation decreased to its lowest level in four months as lower oil prices were to blame.
Looking ahead, more than half of those surveyed (53 per cent) projected a rise in company activity over the following 12 months, while only five per cent predicted a reduction. Even though confidence dropped from its 11-year high reached in June, it was still much above the survey’s long-term average.
“Overall economic activity has pushed the construction sector to a new high. There was a resurgence in the commercial sector, as well as in the housing sector, which accounted for the majority of the rise “The head of the CIPS, David Noble, made the comments.
“Some organisations were unable to actively pursue new business due to capacity restrictions, preferring to use their resources to fulfil existing commitments. Some raw material shortages were still in display as suppliers were challenged to get their act together and keep pace.
“There was a severe shortage of available competent workers because subcontractors were still in high demand and paid more. But the rise in the level of permanent postings and employment generally rising for the last 32 months supported an optimism exhibited by more than half of the poll respondents.
“UK interest rates are unlikely to rise in the near future, so growth is not stifled by uncertainty about the long-term viability of the global economy. The industry was given a much-needed boost when oil prices were constantly lower.”