Buyers see brighter days ahead despite resi slump

Grant Prior 2 years ago
Share

Confidence levels among construction buyers reached their highest point for six months in January despite output suffering its fastest fall since May 2020.

The latest bellwether S&P Global/CIPS UK Construction Purchasing Managers’ Index dropped to 48.4 in January from 48.8 in December and was below the neutral 50.0 threshold for the second month running.

House building led the decline at 44.8 with the steepest rate of contraction in the sector since May 2020.

Commercial activity declined at 48.2 for the first time in five months while civil work was close to stabilisation at 49.7.

Looking ahead, around 43% of the survey panel anticipate a rise in business activity over the year ahead, while only 17% forecast a decline.

The resulting index signalled a sharp rebound in business expectations from the 31-month low seen in December 2022.

Construction companies often commented on improved sales pipelines and hopes of a turnaround in new orders.

“Some firms cited optimism that confidence would eventually return to the housing market over the course of 2023, assisted by a stabilisation in borrowing costs.”

Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply, said: “The wrecking ball of higher inflation and interest rates has knocked the UK’s residential building output to its weakest since May 2020 as stretched mortgage affordability impacted on the building of new homes.

“The other sectors also saw stagnation, so, it’s a construction conundrum, that builder optimism has risen to the highest for six months with the sector facing the second consecutive month of order books looking increasingly empty.

“This hopeful aspect could potentially be attributed to more enquiries filtering through to building companies which could develop into concrete orders in the coming months alongside the economy showing small, incremental improvements. Delivery times and material availability also improved which was a boost for firms working on ongoing projects.

“The continuing price pressures for energy and wages still remain a concern, along with the highest level of job shedding for two years and building skills remaining in short supply.

“Evidently, there are still roadblocks ahead, but we should have faith that the sector can see a path through for better outcomes in 2023 after languishing in
contraction in the last few months.”

Latest news

£200m deal unlocks full 1,000-home Digbeth scheme

Caddick has started early works on the Moda-led Stone Yard project
31 minutes ago

10 big road and rail upgrades get funding green light

£1.3bn A66 dualling, Simister Island junction upgrade and Midlands Rail Hub get funding
1 hour ago

Design, build and finance plan for £1bn Cheddar 2 reservoir

South West Water starts pre-bid market engagement on 75km pipeline and reservoir
43 minutes ago

Illegal working blitz catches Indian builders

Home Office raids target migrants working cash-in-hand on sites
19 hours ago

Major Sizewell concrete win for local supplier

Eastern Concrete Ltd wins its biggest ever contract
1 hour ago

SIG chief put on gardening leave

New CEO appointed as Gavin Slark steps down immediately
1 hour ago

Adjustable hard hat launched for different hair types

AtkinsRéalis initiative will also make PPE more comfortable for bald builders
1 hour ago

Lynch appeal sees £800,000 abnormal load fine reduced to £10k

Judge rules original fine was was 'manifestly excessive'
1 day ago

Government calls up firms to explore PPP healthcare projects plan

New public-private partnership idea to be scoped out with contractors
1 day ago

Balfour Beatty terminates Danny Sullivan labour deals

Around 500 workers on HS2 will be moved to alternative agencies or be taken on direct
3 days ago

Prosper picks 34 firms for £1bn retrofit bonanza

Equans, Fortem, Mears and Vinci among winners on four-year PAS 2035 framework
1 day ago

Trio face prosecution after Hinkley site death

Main contractors and client to face charges over death of site supervisor
3 days ago

£60m raised to advance world-first cement CCS project

Five lime and cement plants to capture emissions for storage under Irish Sea
1 day ago

Buyers see recovery in house building sector

But civil and commercial work still in the doldrums
4 days ago

Apprentice saws-off thumb on hotel refurb site

Court hears how digit was reattached and teenager continued training with another firm
4 days ago

Laing O’Rourke tops June contracts league

£919m animal super lab dominates new orders
4 days ago

TSL turnover smashes £500m as profit almost trebles

Data centre and logistics contractor rises high on surging demand
4 days ago

Gleeson Homes chief exec leaves business after restructure

Management revamp after "challenging" year
4 days ago

Green light for 1,600-home Oldham town centre overhaul

Plans for over 1,600 homes across six regeneration sites approved
4 days ago

DSM wins Norwich city centre clearance job

Anglia Square shopping centre clearance for £300m scheme
4 days ago

13-year-old becomes UK’s youngest qualified digger driver

Grandson of Gallagher Group chairman sets industry record
4 days ago

Cubby reborn in £12m Svella-backed takeover

£50m revenue target set as 14 firms combine under new Cubby Group banner
5 days ago

North East NHS trusts plot £3bn health estate overhaul

Market engagement begins for major construction push across four trusts
5 days ago

HG goes green on cranes in £1.2m switch to battery power

Diesel-free crane drive cuts fuel bills by 94%
5 days ago

Developer fined £165,000 for fire safety failings

Firm ignored fire safety orders on apartment job in Preston
5 days ago

Bidding to start for £1.8bn North West framework

Contractors invited to bid for latest Procure Partnerships deal
5 days ago

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
6 days ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
6 days ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
6 days ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
6 days ago