Construction buyers report “phenomenal” month in May

Grant Prior 3 years ago
Share

Construction buyers saw output growth at its strongest since September 2014 last month as new order volumes increased at the fastest pace for a quarter of a century.

At 64.2 in May – up from 61.6 in April – the bellwether IHS Markit/CIPS UK Construction PMI Total Activity Index registered above the 50 no-change value for the fourth consecutive month and signalled the strongest rate of output growth for just under seven years.

House building (index at 66.3) was the best-performing category of construction activity in May, followed by commercial work (64.4).

The latest increase in work on commercial projects was the steepest since August 2007, reflecting strong demand conditions following the reopening of customer-facing areas of the UK economy.

Civil engineering activity (index at 61.3) also increased sharply during May, although the pace of expansion eased slightly since the previous month.

Suppliers’ delivery times lengthened sharply in May, with the downturn in vendor performance the second-steepest since the survey began (exceeded only by that seen in April 2020).

Stretched supply chains and steep rises in raw material prices contributed to a rapid increase in average cost burdens. The overall rate of input price inflation was the highest in just over 24 years of data collection.

Construction companies remain highly upbeat about their growth prospects for the next 12 months. Around 61% of the survey panel predict a rise in business activity, while just 8% anticipate a decline.

Positive sentiment was mostly attributed to resurgent customer demand, alongside optimism about the UK economic outlook following the successful vaccine roll out.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said: “The construction sector continued its expansion programme with a phenomenal acceleration in growth and the strongest for seven years as new orders filled in at the fastest rate for almost a quarter of a century.

“Residential work was back in the top spot as house building rose at the quickest pace since August 2014, serving as an antidote to the recent scarcity in housing for lets or buy, and driven by consumer demand and a boost from the stamp duty holiday.

“Busy purchasing managers were under pressure to keep up and buying up at the fastest rate since April 1997, changing sourcing strategies to find depleting essential materials and stocking up just as supply chain problems continued to mount along with prices.

“With inflation for goods and raw materials at a 24-year high, companies will be concerned that much-needed profits will be eaten away as building projects take shape and could be held up by some of the longest delivery times on record.

“Skills shortages are also becoming a problem, with recruiters finding talented labour hard to find, as job creation was at robust levels and the threat of staffing cutbacks has become a distant memory.”

Latest news

McLaren gets green light for 45-storey Leeds tower

Landmark Wellington Square scheme will see 464 flats built with 360,000 sq ft of offices
3 days ago

Heavy rain causes 1.9% construction output fall

Hopes remain undampened of a resi-led recovery this summer
3 days ago

Taziker restruture to return to profitability after £1.2m loss

Founders bought the business back from private equity after last year's loss
3 days ago

£220m London wharf homes scheme approved

285 homes to be built beside protected Albert and Swedish Wharves in Wandsworth
3 days ago

Major project veteran named civils director for Sizewell C

David Speight previously worked on Hinkley, Heathrow and HS2 client teams
3 days ago

Morgan Sindall lands £19m Milton Keynes hospital job

Crane lifts to be carefully co-ordinated to ensure air ambulance remains active
3 days ago

Clancy bolsters civils leadership team

Daniel Tonkin and Simon Hyams join as operation directors of water and infrastructure
3 days ago

Balfour names new project boss for HS2’s super-hub station

Steve O’Sullivan replaces Nigel Russell who was promoted to CEO of Balfour's HS2 ops
4 days ago

Buckingham Group supply chain hit doubles to £256m

Total owed to unsecured creditors soars as surety providers finalise claims
4 days ago

Builders demand an end to police plant bans

Call to suspend all embargoes on moving mobile cranes and large site kit
4 days ago

Green light for £65m Blackpool multiversity campus

Education campus of 350,000 sq ft will be delivered in phases
4 days ago

Vinci signs £138m Sheffield steel forge expansion deal

Sheffield Forgemasters signs landmark contract after two years of pre-construction works
4 days ago

McAlpine hires HS2 programme boss to head defence arm

Armed forces logistics expert Mike Hickson takes role as MD of defence
4 days ago

£200m carbon capture plan for Deeside site

Energy from waste operator enfinium looking to invest in North Wales plant
4 days ago

McAleer & Rushe promotes five staff to contracts directors

Design and build contractor targets £500m revenue next year
4 days ago

Consultant quartet win Government estate upgrade deal

Government Property Agency selects Arcadis, Tetra Tech, AtkinsRéalis and McBains
5 days ago

Resi towers pioneer to transform Liverpool site

Beetham founder Hugh Frost to help develop 1,200 new homes
5 days ago

Construction Manager of the Year crowned

Galliford Try's Barry Kingscote wins coveted prize: Full list of winners
5 days ago

Landsec £250m London terraced office job approved

Skanska tipped for 20-storey Hill House scheme near Fleet Street
5 days ago

Lendlease tops March contracts league

BAM and ISG rank third with big contract wins
5 days ago

Vistry strikes deal with Homes England for 1,000 units

Firm's timber frames factory will supply most of the Midlands houses
5 days ago

Morgan Sindall go-ahead to build 23-storey Salford resi job

Funding deal with CBRE allows latest project on bank of River Irwell to proceed
5 days ago

Unite Students gains planning for London and Bristol schemes

RG Group will build landmark Stratford tower and Freestone Island projects
5 days ago

Rolls-Royce gets go-ahead for 1.1m sq ft expansion in Derby

Major expansion of Raynesway campus planned to met submarine fleet orders
6 days ago

GMI Construction edges back into profit

A year of controlled consolidation helped generate £0.9m profit but cash at bank dropped to £10m
6 days ago

Balfour gets final sign-off for HMP Highland at £209m

Deal struck for delayed Inverness prison after costs rocket
6 days ago

Renew buys bridge maintenance business

Contractor boosts highways division with £5m acquisition
6 days ago

HS2 tests market for £150m mass transit job

2.4km long elevated Automated People Mover to go out to tender in 2026
6 days ago

Cardo completes fourth acquisition in a year

Expanding Welsh building maintenance specialist reaches £170m turnover
6 days ago

Watchdog clears Heidelberg takeover of Mick George

Four quarries and five ready-mix operations to be sold to meet competition concerns
6 days ago

Contractor services