Construction buyers see strong surge in new orders

Grant Prior 2 years ago
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The construction recovery continued in November with buyers reporting new order volumes expanding at the fastest rate for more than six years.

The bellwether IHS Markit/CIPS UK Construction Total Activity Index rose to 54.7 in November, up from 53.1 in October – anything above 50 represents growth.

All three broad categories of activity saw higher output in November with house building the best-performing area with an index of 59.2, while civil engineering returned to growth at 52.3 and  commercial work increased marginally to 51.9.

The latest improvement in construction order books was the steepest since October 2014, which survey respondents attributed to a recovery in tender opportunities and improving confidence among clients.

Greater workloads also contributed to a strong increase in purchasing activity during November, with the rate of growth reaching its highest for just over six years.

Rising demand for construction products and materials placed additional pressure on supply chains in November.

This was signalled by another sharp lengthening of lead-times among vendors. Survey respondents often commented on transport delays and stock shortages.

Meanwhile, input costs increased at the fastest rate since April 2019 amid stretched supply across the sector, with construction firms commenting on particularly sharp rises in timber prices.

Tim Moore, Economics Director at IHS Markit, 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.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “The sector is moving back to strength with another solid rise in output and gaining more momentum as new orders rose last month at the highest rate since October 2014.

“The energy behind this success was primarily the housing sector as sales remained buoyed by consumers rushing to meet the stamp duty relief deadline less than four months away and a rise in home improvement projects for locked down citizens.

“The below par performance of supply chains, overstretched by the bulk of this renewed demand held back further progress as lead times increased and shortages scuppered agile builders ready to get going again.”

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