The latest monthly survey of construction industry purchasing managers indicates that November was a month of clients starting to regain confidence.
There are also signs that the worst phase of supplier delays 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. Rapid input price inflation persisted and haulage driver shortages added to cost pressures, but the latest overall rise in operating expenses was the least marked for seven months.
At 55.5 in November, up from 54.6 in October and 52.6 in September, the headline seasonally adjusted IHS Markit/CIPS UK Construction PMI Total Activity Index signalled “a robust and accelerated expansion of overall construction activity”, the survey authors said.
The index has now posted above the 50.0 no-change value for 10 consecutive months (thus representing sustained industry expansion). November’s score was the highest since July.
(In July it scored 58.7, down from June's 24-year high of 66.3.)
In November the strongest rise was in commercial construction (index at 56.5), offsetting a sight showdown in house-building growth (54.7, down from 55.4). Civil engineering was the weakest-performing area in November (53.9), although it scored better than it had in the previous two months.
Another solid increase in new business volumes helped to boost construction output during November, with this index hitting a three-month high. Survey respondents mostly noted that improving client demand had led to more enquiries, although some firms suggested that supply constraints had a negative impact on confidence.
Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier although firms noted an improvement in the availability of some products (especially timber). Around 72% of the survey panel reported an increase in purchase prices in November, while only 3% reported a decline. That said, the resulting index signalled the least marked rate of cost inflation since April. Rapid price pressures and supply shortages were a factor dampening business optimism in November.
Tim Moore, director at IHS Markit, which compiles the survey, said: "November data highlighted a welcome combination of faster output growth and softer price inflation across the UK construction sector. Commercial building led the way as recovering economic conditions ushered in new projects, which helped compensate for the recent slowdown in house building. Major infrastructure work also boosted construction activity in November, as signalled by the fastest growth in the civil engineering category since August.
"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. Port congestion and severe shortages of haulage capacity were again the most commonly cited reasons for longer lead times for construction products and materials."
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.
"Commercial orders were the strongest, picking up the slack from the subdued housing and civil engineering sectors and demonstrating that business confidence in the UK economy was improving. 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 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."