UK construction output volume on the rise

UK construction output volume on the rise

The UK’s construction sector has been steadily increasing its output, according to IHS Markit statistics. 

The figures, released in early May, pointed to the quickest rise in the number of new orders since September 2014, but an increased rate of input cost inflation – currently at its highest since April 1997 – has tempered this uptick.

April’s output volumes were measured at 61.6 through what is known as the IHS Markit/CIPS UK Construction PMI Total Activity Index. This reading was down slightly against the 61.6 recorded in March. 

Any figure above 50.0 constitutes overall construction output expansion, and the index has recorded growth in 10 of the past 11 months, with the exception being January 2021. 

In a recent statement, IHS Markit attributed the recovery to the revival of civil engineering activity, commercial work, and house building.

Tim Moore, economics director at IHS Markit, said: “New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects. This added to the spike in workloads from robust housing demand and the delivery of major infrastructure programmes such as HS2.”

However, when discussing the challenges facing the industry, Moore was less optimistic. He said: “Shortages of construction materials and much longer wait times for deliveries from suppliers were a sting in the tail for the sector. Aggregates, timber, steel, cement and concrete products were all widely reported as in short supply by survey respondents.”

According to IHS Markit, commercial was the best-performing sector within construction in terms of output during April, despite a fall in its rate of expansion from the previous month. However, Civil engineering recorded its fastest speed of recovery since September 2014.

Mike Hedges, director at Beard, said that the resurgence can be largely attributed to the belief that the end of the pandemic is in sight in the UK. He added: “Throughout the pandemic there has been understandable hesitancy from clients as they wait to see the direction we head in, however with light appearing at the end of the tunnel, clients are now ready to hit the green button.”

However, he said there were key challenges ahead. He added: “Positivity in the sector resulted in the fastest rise in overall new orders since September 2014. However, a key challenge for the industry is material shortages and delays in supply. These current delays are best navigated and planned for in new projects on a collaborative basis, leading to a very positive outlook for the construction sector overall. Client confidence appears to have returned, and as we head into the summer months, sunnier skies appear ahead.”