Construction industry sees surprise growth

Construction activity hit its highest level for seven months in October, with the industry buoyed by growth in housebuilding.

This is according to a survey from financial information and services company Markit, which recorded activities at 52.6, an increase of 0.3 from the previous month. A reading above 50 indicates growth.

Housing growth

Housing activity was the key driver behind the expansion, with the survey showing a “solid increase” in residential building. Commercial construction also stabilised.

The news marks a significant improvement in the sector, in which activity had fallen to a seven year low in the run-up to the EU referendum.

But Markit noted that companies across the industry had seen customers delaying decisions on building projects amid continued uncertainty around the terms of the UK’s exit from the Union.

New orders falling back?

Tim Moore, senior economist at IHS Markit, said: “The UK construction sector has started the fourth quarter in a positive fashion, with the latest survey data revealing a moderate rebound from the downturn seen in the summer.

“Construction growth was dependent on a solid recovery in residential work, as civil engineering and commercial building struggled for momentum in October.”

However, Mr Moore also noted a slow-down in the rate of new business expansion. He said: “While business activity has picked up since the third quarter, the recent phase of new order growth has been the weakest for three-and-a-half years. Survey respondents noted that Brexit-related uncertainty and concerns about the UK economic outlook had held back investment spending.”

David Noble, group CEO of CIPS, added: “Housing proved to be the most resilient driving force behind the continued moderate expansion of activity – the fastest since March. But the level of new order growth was at a weaker level than seen earlier in the year.”

Have you noticed a construction industry uptick? Tell us in the comments.

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