UK PMIs: Construction activity continues growth in December
Construction activity continued to recover in December, helped by higher order books and resumption of work that had been delayed due to the pandemic.
The IHS Markit/Cips purchasing managers (PMI) index for construction scored 54.6 in December, with any score above the 50 mark indicating growth.
The reading was more or less unchanged from November, when a score of 54.7 was recorded. However, it was slightly below flash estimates of 55.
Increased housebuilding activity also helped push up construction during the month, with higher demand leading to a rise in employment.
Tim Moore, economics director at IHS Markit, said: “December data illustrated a positive end to the year for the UK construction sector, mostly fuelled by a sharp rebound in house building.
“Overall output growth has slowed in comparison to the catch-up phase last summer, but now it is encouraging to see the recovery driven by new projects and stronger underlying demand.
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“A sustained improvement in construction order books resulted in a rise in employment numbers for the first time in nearly two years and the most optimistic growth expectations since April 2017.”
He added that construction firms would be hopeful that the increase in demand would extend to non-residential building in the coming year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the the 27 per cent year-over-year jump in gross public sector investment planned for 2021 would provide a “big boost” to the sector.
He added: “Overseas investors might also be willing to supply more finance for U.K. construction projects, now that the risk of a Brexit-driven depreciation of sterling has gone.”
But despite the promising figures, Mark Robinson, group chief executive at SCAPE, the UK’s leading public sector procurement authority, said that the industry would face more challenges.
“Even with sites remaining open, the impact of a third national lockdown and increased social distancing measures are likely to affect the speed at which future projects are brought forward, including decisions on private investment and important urban regeneration.
“The public sector continues to be the main vehicle for contractor growth and investment in communities, backed by increased government funding, as has been the case since sites reopened last summer.
“These projects remain best-placed to set the standard for the progressive and ambitious goals set out in the new Construction Playbook.”