UK construction market shows upturn

By Neill Barston04 February 2015

The UK construction industry started the year with a positive trend of growth, according to the latest industry figures.

Results from the Markit Purchasing Managers’ Index (PMI) in January recorded a rating of 59.1, having stood at 57.6 in December - (with anything over 50 being considered as positive).

This pointed to an acceleration of business activity as the construction sector looked to reverse the comparative slowdown that had been seen in the final two months of 2014.

Increases had been recorded in residential construction and commercial construction at the start of this year. There had also been an upturn in civil engineering ventures progressing this month – which countered the dip seen in the sector for December.

However, concerns were raised over the rate of job creation within the industry, which sank to its lowest level in 13 months.

The Markit report also highlighted the fact that supply chain pressures had persisted in January, with strong demand for construction materials and lack of spare capacity resulting in extended delivery times.

Around half of the survey panel responsible for the PMI data were optimistic for further growth in 2015. Only 10% had forecast any reduction in business during the year.

Tim Moore, senior economist at Markit, explained that UK construction companies had "found their feet again" after a protracted slowdown in output at the end of 2014.

He said, “Stronger trends were recorded across housing, commercial and civil engineering, although each category of activity still experienced much slower growth than the high-water marks achieved last year.

“Expectations in relation to output growth over the next 12 months remained close to December’s low, contributing to a further slowdown in construction sector job creation during January. However, skill shortages persisted at the start of the year, with construction companies indicating that subcontractor charges increased at a near record pace.”

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