New business shows fastest growth in six years

Last month, the sector saw the fastest improvement in order books for more than six years, new Purchasing Managers’ Index (PMI) data shows.

Overall output activity rose to 54.7 in November from the 53.1 recorded in October. It remained below the 58.1 seen in July but the increase in new business volumes was much higher. Any figure above 50 on the index represents a growth in output.

The latest survey by IHS Markit and the Chartered Institute of Procurement & Supply found the increase in construction order books in November rose at their steepest rate since October 2014. This was said to be due to a recovery in tender opportunities and improving confidence among clients.

However, staff headcounts are still falling with some firms telling the survey they are still cutting jobs in order to reduce overheads.

Supply chains were also under pressure due to rising demand for construction products and materials in November. Survey respondents complained of transport delays and stock shortages. A sharp rise in timber prices helped put up input costs.

IHS Markit economics director Tim Moore said: “UK construction output stayed on a recovery path in November and there were signs that the main growth driver has transitioned from catch-up work to new projects. The latest increase in new orders was the strongest since late 2014, with construction firms reporting a boost from rising client confidence and the release of budgets that had been held back earlier in the pandemic.”

Housebuilding was the best-performing sector with a reading of 59.2, while civil engineering returned to growth after a decline in October, achieving 52.3. Commercial work increased only marginally, to 51.9.