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New construction order growth hits 11-month high

NCE stock business

UK construction companies saw the fastest rise in new orders in December since the beginning of 2016, a survey of purchasing managers has found.

The increase saw new business volumes expand at the strongest rate for 11 months, with respondents citing more client demand and a better economy as driving factors. However the survey found the sector still suffers from cost pressures due to higher raw material prices.

The civil engineering sector saw work increase at a ‘robust pace’ according to the Markit/CIPS UK Construction Purchasing Managers’ Index. The index sat at 54.2 in December, up from 52.8 in November.

“December’s survey data confirmed a solid rebound in UK construction output during the final quarter of 2016. All three main areas of construction activity have started to recover from last summer’s soft patch, but in each case growth remains much weaker than the cyclical peaks seen in 2014,” said report author and IHS Markit senior economist Tim Moore.

“Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year. Meanwhile, commercial activity was the weakest performing category in December, reflecting an ongoing drag from subdued investment spending and heightened economic uncertainty.

“The main negative development in December was a sustained acceleration in input cost inflation to its strongest since 2011. UK construction companies noted that the weaker sterling exchange rate had resulted in higher costs for a wide range of imported materials, while some also reported that forward purchasing of inputs had led to depleted stocks among suppliers.”


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