Orders Boom as Construction Sector Growth Rises
Summary of HIS Markit/CPS latest construction report
House building remains the best-performing category
New order growth highest for just over six years
Stretched supply chains lead to rising costs in November
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COMMENTS:
Tim Moore, Economics Director at IHS Markit, which compiles the survey:
“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.
Kate Kirby, partner in the Construction & Infrastructure practice at global legal business, DWF
“November’s figures show a continued trend of growth in the construction sector, despite the most recent lockdown conditions taking hold in their various forms across the UK during the month. While growth has slowed down in the later part of the year, there is still demand to get new projects off the ground. Similarly, the upturn in the housing market, spurred on in part by the stamp duty holiday, is also adding to a positive outlook.
“Coronavirus has hit all parts of the economy hard and unfortunately, employee numbers have dropped once again despite construction continuing during the latest lockdown measures. However, with the news that a vaccine is to be rolled out imminently, coupled with more testing facilities around the country and in airports, it is hoped 2021 will provide greater job security for those working in the construction sector and beyond.”
Fraser Johns, Finance Director at Beard
“New orders at the highest level since 2014 really demonstrates that confidence is returning, new projects are back on plan and rather than just catching up on ourselves, the construction sector is continuing its recovery.
“Certainly, this reflects our own experience at Beard as we look towards 2021 with a head of work which is very healthy, not only for this year but at any time.
“While this is all cause for optimism, we also need to recognise that there is continued pressure on supply chains currently. That is going to be brought into sharp focus come 1st January if the Brexit talks currently ongoing are not resolved with an agreement of some sort. No industry sector as important to the economy as construction can afford to suffer due to delays at the border while we wait for materials to reach our sites.”
Duncan Brock, Chartered Institute of Procurement and Supply Group Director
“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.”
“In a bid to dampen down the effects of the sharpest rise in input costs since April 2019, builders were reducing headcounts to keep their own heads above water leading to another fall in job numbers,”
“As more work fills the sector’s pipelines, the necessity to recruit is likely to become more urgent, and the shortfall could be reversed barring further disruption.”
Howard Archer, EY ITEM Club chief economic advisor
“Positively, the index observed there were signs the main growth driver has transitioned from catch-up work to new projects.”
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