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Survey of purchasers shows construction bouncing back again

2 Oct 15 The latest monthly survey of construction purchasing managers indicates that activity reached a seven-month high in September although the speed of new business growth continues to ease from June’s recent peak.

Supply chain problems also show continued signs of easing. Construction companies indicated the least marked lengthening of suppliers’ delivery times since November 2010.

The headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) was 59.9 in September, up from 57.3 the previous month.

House-building remained the best performing category of construction activity. In fact, the latest expansion of residential building was the strongest for 12 months, which some survey respondents attributed to the launch of development projects that had been delayed earlier in the year.

Commercial construction activity also rose sharply in September, with the pace of growth accelerating to a seven-month high.

Civil engineering activity increased for the fifth consecutive month and the rate of expansion picked up to its fastest since February.

While volumes of new work rose in September, it was at the most modest rate for five months and much weaker than the post-crisis peaks recorded in 2013 and 2014.

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Construction companies nonetheless remain upbeat about their prospects for output growth over the next 12 months – 52% of the survey panel expect a further upturn in business activity, while only 6% anticipate a reduction.

Markit senior economist Tim Moore said: “Construction firms enjoyed a strong finish to the third quarter of 2015, as a sustained rebound in new development projects continued to have an impact on the ground. Moreover, September data suggests that the UK construction sector is still experiencing its most intense cycle of job hiring for at least 15 years, and consequently skill shortages remain a dominant concern across the industry.

“Residential building saw the most decisive momentum shift in September, hitting a one-year high in the process, while commercial development also picked up speed as rising business nvestment and improving UK economic conditions acted to bolster demand. A growth spurt for civil engineering activity completed the hat-trick of positive news for the main construction sub-sectors in September, helped by robust pipelines of infrastructure work.

“While the latest survey provides positive news on construction output, jobs and supply-chains, there was a warning light flashing in terms of total new orders. Construction companies have recorded a steady slowdown in new business growth from June’s post-election peak and the latest upturn was the second-slowest since mid-2013.”

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