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Construction stays in positive territory

7 February 2022

Construction stays in positive territory

A positive picture of the construction industry’s performance in January was given by data in most the Purchasing Managers’ Index (PMI) survey, published by IHS Markit for the Chartered Institute of Procurement & Supply (CIPS). 

At 56.3 in January, up from 54.3 in December, the Total Activity Index registered above the 50.0 no-change mark for the twelfth month in a row. Commercial work was the best-performing category (57.6), with survey respondents noting that optimism about the roll-back of pandemic restrictions had led to greater spending on projects.

House building activity, however, increased at the slowest pace for four months (54.3).

Input buying picked up at the start of 2022, reflecting new project starts and stock building efforts, and construction firms recorded the least widespread delays in the supply of materials for almost one-and-a-half years.

The survey indicated that construction companies remained highly upbeat about the business outlook. More than half forecast a rise in output during the year ahead, while only 5% predict a decline. 

However, the figures were published the day after the chancellor introduced measures to help people facing high energy bills and, as well as raising interest rates, the Bank of England warned that inflation could rise above 7% this year and average close to 6% in 2022, so challenging times might lie ahead.  

Indeed, Tim Moore, director at IHS Markit, commented: "Residential work increased at one of the slowest rates since spring 2020, which is an early sign that cost of living concerns and rising interest rates could start to dampen the post-lockdown surge in spending.” 

Nevertheless, the UK still needs to build many more houses each year to meet government targets, and hopefully many people have stored the cash reserves they built up while they were furloughed and not working, in order to use for rainy – or even stormy – days ahead. 

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