Buyers report robust construction recovery in July

Grant Prior 2 years ago
Share

Buyers reported the fastest rise in construction output for nearly five years last month as the industry continued a “robust” recovery from lockdown.

The bellwether IHS Markit/CIPS UK Construction Total Activity Index hit 58.1 in July – up from 55.3 in June.

Any figure above 50 represents a rise in output and the latest reading signalled the steepest expansion of overall construction work since October 2015.

But the uptick was not enough to save thousands of jobs with the rate of industry job shedding faster than in June as a thrid of companies made redundancies.

Residential building was the main growth driver in July with activity increasing to the greatest extent since September 2014.

Commercial work and civil engineering activity both expanded at slightly quicker rates than in June.

Construction firms are optimistic overall about the prospect of a recovery in business activity during the next 12 months.

Around 43% of the survey panel expect a rise in output over this period, while only 30% forecast a fall.

Tim Moore, Economics Director at IHS Markit, said:“Construction companies took another stride along the path to recovery in July.

“Survey respondents noted a boost to sales from easing lockdown measures across the UK economy and reduced anxiety about starting new projects.

“However, new work was still relatively thin on the ground, especially outside of residential work, with order book growth much weaker than the rebound in construction output volumes.

“Concerns about the pipeline of new work across the construction sector and intense pressure on margins go a long way to explain the sharp and accelerated fall in employment numbers reported during July.

“This shortfall of demand was mirrored by the fastest rise in sub-contractor availability since November 2010 and another decline in hourly rates charged.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “Though builders were slightly less optimistic about prospects for the year ahead compared to the previous month, recovering lost ground gives hope that the damage caused by the pandemic may be less entrenched if recovery continues along this robust path.

“However, with another sharp fall in staffing levels, the number of redundancies increasing and competition for raw materials resulting in higher costs, holes are already starting to appear just as the sector regains its strength.

After a summer of this blistering return to growth, building companies should prepare for a chilly autumn as furlough schemes come to an end and the real strength of the UK economy is revealed.

“Making up for lost time is one thing, but sustainable real growth is what the sector needs otherwise this recovery is just building on soft sand.”

Latest news

Materials giant CRH looks to sell contractor Farrans

More than 550 staff set to get new owner
1 day ago

West Yorkshire transport projects delayed to save £270m

Over 30 transport schemes to be placed on hold due to cost inflation budget pressure
12 hours ago

Decision on A1 Costain dualling job delayed for third time

Development consent decision for £260m Northumberland scheme put back a further 9 months
13 hours ago

Colas wins £140m Cheshire highways upkeep deal

Incumbent contractor Ringway will handover to Colas in April
13 hours ago

Skanska to lend staff cash

Contractor links-up with finance firm to offer affordable loans to employees
13 hours ago

Ilke Homes pulls off £100m record-breaking fund raise

Largest-ever capital raise by a UK modular house builder to fund expansion
1 day ago

Construction buyers fear for year ahead

"Construction companies now have a tightrope to walk in terms of being ready for recovery and cautious around investment"
1 day ago

Gove calls for competition probe into house building

Levelling Up and Regeneration Bill 'strengthened' with new measures
1 day ago

Schools get £500m for energy upgrades this winter

Extra cash found for better heating controls, insulation and energy efficient lighting
1 day ago

1,000-home North London scheme approved

Developer Hill will start work in the Spring on South Tottenham site
1 day ago

Bid race for £500m Suffolk construction framework

Construction and building services firms called up for East of England four year deal
1 day ago

Mace employs robot dog to avoid slip and trips in tunnel

Robot working in dark and hazardous conditions under Heathrow Airport
1 day ago

Administrator details confirmed at Southampton M&E firm

Begbies Traynor now in charge at Working Environments as suppliers face large losses
2 days ago

Former Galliard chief takes helm at Inland Homes

New CEO Don O'Sullivan sets out to return south east house builder to profitability
1 day ago

Applicant numbers nosedive for construction vacancies

Recruitment market gets even more competitive - how the Enquirer can help
2 days ago

Industry veteran to head Henry Bros northern arm

Peter Commins, former Kier and Balfour Beatty northern chief, to spearhead growth drive
1 day ago

Housing association shuts in-house modular factories

Swan closes loss-making steel frame and cross-laminate timber factories
2 days ago

350-homes approved around iconic London Tube station

Housing blocks to be built around Grade II-listed Hounslow West Tube station
2 days ago

Domis set for £195m Boddingtons Brewery scheme

Developer Salboy buys Manchester site to kickstart long-awaited 556 homes project
2 days ago

John Lewis £500m funding deal to build 1,000 rental homes

Deal to advance BTR flats at store sites in Bromley, West Ealing and Reading
3 days ago

Esh launches new housing retrofit division

Esh Retrofit Solutions will target market to improve the energy performance of social rented homes
2 days ago

Eric Wright wins tricky £52m Liverpool transformation

Contractor working with engineers at Ridge and Partners on "challenging" Stanley Lock Flight site
5 days ago

Investment giant buys Bristol M&E contractor

RDCP Infrastructure acquires Avon Combined Electrical Services
5 days ago

Demolition start for £50m Farnworth town centre rebuild

Caddick Construction is tipped for main works due to start in the spring
5 days ago

L&G Modular strikes deal to build 1,000 affordable homes

Modular homes business teams up with Hampshire's Vivid housing association
5 days ago

Former Erith operations director joins John F Hunt

Scott Exell named new operations director at demolition specialist John F Hunt
6 days ago

Green light for £135m Leeds twin tower resi scheme

Construction to start in New Year on 500 build-to-rent apartments
6 days ago

Mace hits 1m tonnes carbon saving target for clients

Present work pipeline betters 2026 carbon emission saving target
6 days ago

Plans in for £40m surf park at former Kent colliery

Seahive surf lagoon and health resort will be built near Deal
6 days ago

Crushed demolition worker vows to return to industry

Shannon Brasier hoping to return to construction following horror accident
6 days ago

Contractor services