Buyers report further construction growth

Grant Prior 12 years ago

Construction buyers reported a continued recovery last month despite growth slowing down on March figures which saw new orders increasing at their fastest rate for four-and-a-half year.

The Markit/CIPS Construction Purchasing Managers’ Index for April dipped to 55.8 from 56.7 in March.

Any figure above 50 on the sentiment survey represents an increase in output.

The results continue to fly in the face of official construction output figures which showed a 3% fall during the first quarter of this year.

Buyers said employment levels rose for the second month in succession and confidence in the 12-month outlook remained much stronger than any time in 2011.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “This month’s Construction PMI figures point towards the continued recovery of the construction sector.

“However, despite good news for order books and a rise in purchasing activity since the start of the year, it’s worth remembering that there is still a long way to go to match the expectations of growth seen before the 2010 spending review.

“In particular, growth in new contracts won and improved confidence, have not yet been accompanied by comparable increases in employment, which may indicate some fragility in the sector for the longer-term. Performance in housing, although slightly higher than last month, remains the poor relation to commercial and civil engineering.

“Suppliers too are under pressure, having reduced capacity during the downturn, they are now struggling to replenish inventories. This has led to increased delivery times and adds a further drag on the industry as a whole.”

Tim Moore, Senior Economist at Markit said: “April saw another generally buoyant UK Construction PMI survey, with rates of output and new order growth close to March’s recent highs. Improved inflows of new work have also helped raise business expectations in the sector from the three-year low seen last Autumn.

“The upturn in businesses’ expectations on a year-ahead horizon represents something of an antidote to the news that the construction sector double-dipped in Q1.

“However, it should be noted that since the 2010 government spending review, the level of confidence in the construction industry has consistently run well below the average seen in the decade before the financial crisis, suggesting there has been a widespread loss of optimism since the deficit-fighting austerity measures were first announced.

“The worry is that the sector may suffer from a lack of large-scale new projects once current undertakings such as the Olympics are completed.

“Further evidence of underlying fragilities also persisted in the beleaguered housing sector where activity growth fell well short of the trend in the wider construction economy.

“Cautious job hiring trends meanwhile continued across the UK construction sector, with firms generally able to expand their business activity without needing to take on more staff. This perhaps reflected the deeper malaise in the sector, with excess capacity meaning that construction companies are looking for a much stronger pipeline of new projects before new employees are taken on in significant numbers.”

Jason Heath, construction finance specialist at Bibby Financial Services added: “Despite last week’s ONS statistics indicating the construction industry has seen a significant reduction in output, the latest Markit/CIPS survey shows that while output was slightly down from March it is still very much in growth territory.

“Although the UK is entering its first double-dip recession since 1975, the construction industry is generally looking buoyant as order books look healthy and are at levels close to March’s highs.

“The construction sector is a vital part of the UK economy and its success or failure will have a significant impact on the country’s finances. It is therefore crucial the industry has access to the flexible funding it needs to grow and succeed.”

Latest news

Plan in for £3bn Lincolnshire mega data centre

3.3m sq ft Humber Tech Park will be one of Europe's largest data centres
3 days ago

Green light for Digbeth 1,300 homes scheme

Warner’s Fields scheme to start with excavation and landscaping of the River Rea
3 days ago

Flagship biodiversity net gain scheme flawed

NAO warns Government's flagship green development scheme at risk of failure
3 days ago

£210m M3 Junction 9 upgrade gains consent

VolkerFitzpatrick to start work in early 2025 on Winnall roundabout, near Winchester
3 days ago

United Living wins 14-year L&Q homes repairs deal

Trafford housing upkeep deal worth £205m
3 days ago

£400m Lewisham resi-led scheme advances

Land deal paves way for Amro Partners' 1,000-home London scheme
3 days ago

McLaren gets go-ahead for Grade II listed Leeds student scheme

Springfield House to be revamped and two new wings added
3 days ago

Piling giant to fit people alarms on all rigs

Cementation Skanska upgrades site safety systems
3 days ago

Vistry to make £800m profit after subcontractor cost cuts

House builder bullish about shareholder returns after asking suppliers for discounts
4 days ago

Shareholders approve £2.5bn Barratt and Redrow merger

Final hurdle is for the competition regulator to approve the deal.
4 days ago

Green light for £80m Leith waterfront revamp

Build-to-rent homes and student accommodation scheme to be built
4 days ago

Tilbury Douglas clears Interserve legacy jobs to return to profit

Revenue tops £500m in first year as standalone contractor
4 days ago

Land deal paves way for Manchester civil service office hub

Government buys five acres at former Central Retail Park
3 days ago

Speller Metcalfe wins Wolverhampton library upgrade

Full works are due to start in the autumn
4 days ago

Skills shortage puts big infrastructure projects at risk

Government failing as an intelligent client and now over-reliant on consultancies
5 days ago

Contractors face further insulation board price hikes

Cost of PIR insulation boards set to rise another 10%
5 days ago

Henry Boot wins £36m Rotherham Markets job

Project involves upgrading existing market and building a new library
5 days ago

Keltbray hires new head of infrastructure procurement

Lukasz Olszewski will oversee rail, energy and highways business units
5 days ago

Tunnel fit out robot to revolutionise civils work

Costain and VVB Engineering part of innovative consortium
5 days ago

Funding deal for £86m wind turbine test centre

Latest investment at National Renewable Energy Centre in Blyth
5 days ago

Plan in for Manchester ‘upside-down’ 18-storey tower

Landmark cantilevered NXQ building plan for city Northern Quarter
6 days ago

London 25km Super Sewer hooked up for commissioning

Tideway completes connection to existing Lee Tunnel sewer system
6 days ago

£200m Lincoln ring-road approved

North Hykeham Relief Road granted planning permission
6 days ago

£1bn Manchester Airport City plan rebooted as new sci-tech hub

Plan pivots from offices to science and manufacturing campus, called MIX Manchester
6 days ago

Record results at maintenance specialist Renew

Infrastructure maintenance work continues to pay off for contractor
6 days ago

Barhale lands £21m shaft scheme for Thames Water

Civils specialist bags latest upgrade deal on Thames Water Ring Main
6 days ago

Caddick names new north east director

Former Laing O'Rourke project lead joins Yorkshire contractor
6 days ago

Mount Anvil wins London Camden estate rebuild

Deverloper wins £133m Bacton Phase 2 development in Gospel Oak
7 days ago

London Met Uni seeks firm for £280m estate upgrade

A single partner contractor will deliver 10-year building upgrade plan
7 days ago

Top 30 M&E contractors set for growth – ranking

Growth in data centres and commercial refits creates optimism for year ahead
7 days ago

Contractor services