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UK construction sector grows at strongest pace in four months

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·Business reporter
·3-min read
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BRISTOL, UNITED KINGDOM - MARCH 18:  Construction workers continue to build new houses on a housing development on March 18, 2014 in Bristol, England.  A number of housebuilders are now constructing more homes this year than they did during the 2007 market peak, thanks to overseas investment and the government's Help to Buy scheme, which has been extended until 2020, boosting the property market and speeding up the number of new homes being built.  (Photo by Matt Cardy/Getty Images)
A steeper rise in commercial construction, which stood at 56.5, helped offset a slight showdown in house building growth, which fell to 54.7 from 55.4. Photo: Matt Cardy/Getty Images

The UK construction sector saw its fastest rise in output for four months during November, boosted by a rise in commercial work.

It was the sharpest increase in commercial activity since July as clients continued to ramp up spending in response to the reopening of the British economy.

According to IHS Market’s monthly construction purchasing managers index (PMI), the reading for the sector in November came in at 55.5, up from 54.6 in October.

Any score of above 50 indicates growth. The index has now posted above the 50.0 no-change value for 10 consecutive months and the latest reading pointed to the strongest rate of expansion since July. The data was collected between 12 and 29 November.

A steeper rise in commercial construction, which stood at 56.5, helped offset a slight showdown in house building growth, which fell to 54.7 from 55.4, amid a robust rise in demand for construction products and materials.

Chart: IHS Markit, CIPS
Chart: IHS Markit, CIPS

Civil engineering was the weakest performing area in November (53.9), although the latest rise in activity was the largest since August.

New business volumes helped to boost construction output during November, with this index hitting a three-month high.

Survey respondents said that improving client demand led to increased numbers of new enquiries, although some firms suggested that supply constraints had a negative impact on confidence, IHS Markit said on Monday.

In addition to this, businesses signalled that supplier delays are continuing to ease, with longer delivery times falling to 47% in November compared with a peak of 77% in June.

Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier performance, although firms noted an improvement in the availability of specific items, particularly timber.

Read more: European stock markets advance despite Omicron threat

But rapid input price inflation persisted during the period, and haulage driver shortages added to cost pressures. The latest overall rise in operating expenses was the least marked for seven months, however.

The data also showed that the overall speed of job creation eased to an eight-month low in November, while sub-contractor usage increased at a slower pace as availability for these workers decreased to the least marked extent since May.

“November data highlighted a welcome combination of faster output growth and softer price inflation across the UK construction sector,” Tim Moore, director at IHS Markit, said. “Commercial building led the way as recovering economic conditions ushered in new projects, which helped compensate for the recent slowdown in house building.”

He added: “Input price inflation remains extremely strong by any measure, but it has started to trend downwards after hitting multi-decade peaks this summer.”

Watch: What is inflation and why is it important?

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