Construction output growth rebounds

The UK construction sector experienced a positive start to the year, with data suggesting output and new business growth rebounded from the lows seen in December.
At 59.1 in January, up from 57.6 in December, the seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI® ) pointed to a robust and accelerated expansion of overall business activity at the start of 2015.

The index has registered above the neutral 50.0 threshold for 21 months running, although the latest reading was the still second-lowest seen since September 2013.

All three broad areas of construction activity picked up since December, but in each case the rate of expansion was weaker than the peaks seen in 2014.

Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI®, said: “UK construction companies have found their feet again after a protracted slowdown in output growth at the end of 2014. Stronger trends were recorded across housing, commercial and civil engineering, although each category of activity still experienced much slower growth than the high-water marks achieved last year.

“In short, the peak speed of the construction recovery seems to be over, but reports of its death have been greatly exaggerated.

“Expectations in relation to output growth over the next 12 months remained close to December’s low, contributing to a further slowdown in construction sector job creation during January. However, skill shortages persisted at the start of the year, with construction companies indicating that subcontractor charges increased at a near surveyrecord pace.

“Strong demand for construction materials resulted in upward pressure on costs and lengthening delivery times from suppliers in January. That said, the latest survey highlighted that lower fuel and energy prices helped drive down overall cost inflation to its lowest for just under two years.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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