Construction cheer

7 December 2020

Positive news comes from the latest PMI (purchasing managers index) data for November from IHS Markit and the Chartered Institute of Procurement & Supply regarding UK construction output.

They suggest a sustained recovery, with the rate of expansion accelerating from the previous month. New order volumes also expanded at the quickest pace for just over six years.

At 54.7 in November, up from 53.1 in October, the headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered above the 50.0 no-change value for the sixth consecutive month.

Construction companies indicated that house building was the best-performing area in November (index at 59.2), despite the rate of growth easing since October. Civil engineering returned to growth in November (52.3), while commercial work increased only marginally (51.9).

The latest improvement in construction order books was the steepest since October 2014, which survey respondents attributed to a recovery in tender opportunities and improving confidence among clients.

Interestingly, the report says that rising demand for construction products and materials placed additional pressure on supply chains in November. This was signalled by another sharp lengthening of lead-times among vendors.

Anecdotal evidence from hirers in recent month suggests that some popular products are subject to longer lead times, as manufacturers restart global supply chains that were understandably relaxed after the pandemic.

There have also been well-publicised reports of delays at Felixstowe and other container ports in processing deliveries and getting goods to where they are needed.

And did someone mention Brexit?

So buyers will need to carefully consider their equipment needs and order in good time to ensure availability for their fleets.

Nevertheless, the PMI data give cause for some positive pre-Christmas cheer. Around 51% of the survey panel forecast a rise in business activity during the year ahead, while only 16% predict a decline. The resulting index pointed to the strongest degree of business optimism across the construction sector since last January, the report said.

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