THE CONSTRUCTION INDUSTRY PROGRESSED AGAIN JUNE AFTER ITS PRE-ELECTION DIP

THE CONSTRUCTION INDUSTRY PROGRESSED AGAIN JUNE AFTER ITS PRE-ELECTION DIP

03 July 2015

THE MONTHLY SURVEY OF CONSTRUCTION PURCHASING MANAGERS INDICATES ANOTHER STRONG SHOWING FROM THE INDUSTRY, WITH BUSINESS CONFIDENCE STRENGTHENING TO ITS HIGHEST LEVEL FOR MORE THAN 10 YEARS.

 

‘Markit’ produces The CIPS UK Construction purchasing managers index (PMI) and presently it is close to 60 after its 22 month low in April of 54.2 with the industry keeping a close eye on the outcome of the general election. Any score above the 50 threshold indicates growth.

 

The residential market was the fastest growing area of the construction industry in June, with the industry also seeing positive results in the commercial and civil engineering sectors. Reports from survey respondents suggested that improving client demand and strong order books continued to support output growth in June. Highlighting this, latest data indicated that overall growth of new work rebounded for the second successive month to its steepest since October 2014. Anecdotal evidence linked greater new business volumes to rising client confidence and improving business conditions across the UK economy as a whole.

 

MARKIT SENIOR ECONOMIST TIM MOORE SAID: “UK CONSTRUCTION COMPANIES EXPERIENCED A GROWTH REBOUND AND SURGE IN BUSINESS CONFIDENCE AT THE END OF THE SECOND QUARTER. SURVEY RESPONDENTS CITED ROBUST INFLOWS OF NEW WORK IN JUNE, ADDING TO ALREADY STRONG ORDER BOOKS ACROSS THE SECTOR.

“EXTRA WORKLOADS AND POSITIVITY REGARDING THE YEAR-AHEAD OUTLOOK MEANT THAT JOB CREATION ACCELERATED TO ITS STRONGEST SO FAR IN 2015.

“THE EXTENT OF THE RECENT RISE IN CONSTRUCTION OPTIMISM IS PARTLY DOWN TO RELIEF THAT PRE-ELECTION UNCERTAINTY HAS NOW PASSED, BUT IT ALSO SUGGESTS THAT FIRMS ARE INFUSED WITH CONFIDENCE THAT UNDERLYING DEMAND WILL CONTINUE TO RECOVER.

“SCORCHING HOT DEMAND FOR SOME CONSTRUCTION PRODUCTS PLACED ADDITIONAL PRESSURE ON SUPPLY CHAINS IN JUNE, WITH DELIVERY TIMES LENGTHENING AGAIN FOR A WIDE RANGE OF MATERIALS. MEANWHILE, ANOTHER SUBSTANTIAL RISE IN SUBCONTRACTOR CHARGES HIGHLIGHTED THAT PERSISTENT SKILL SHORTAGES IN THE CONSTRUCTION SECTOR ARE CONTRIBUTING TO SHARP RISES IN LABOUR COSTS IN SOME AREAS.”

 

THE INDUSTRY IS ALIVE AND WELL FOR ALL PARTIES RELATING TO CONSTRUCTION.

 

C & O POWDER COATINGS, BASED IN THE NORTH WEST

Moving forward, 62% of the purchasing professionals predict a rise in output over the next 12 months with only 4% predicting a decline. These results give the UK construction sector its strongest degree of business optimism in a decade. Companies that anticipate a rise in business activity over the year ahead generally cited increased investment spending among clients and robust demand for new residential projects. Moreover, survey respondents noted an increase in new invitations to tender across a range of commercial projects, alongside hopes of new business gains from forthcoming major infrastructure projects. As well as increased employment in the sector, a rise in purchasing activity in constriction companies and the sharpest buying rates since the turn of the year indicate a positive outlook for the rest of the year as we head further into summer.