Construction industry showing more promise

The latest Markit/CIPS purchasing managers’ index (PMI) rose to 48.4 in January from 44.4 in December, the best result for eight months and a sign that the sector is building up momentum for the year ahead.

Respondents to the respected survey also commented on a boost to client demand from receding political uncertainty. The construction businesses polled also agreed that they are now the most optimistic about their growth prospects since April 2018.

In addition, many firms noted that clients’ willingness to spend had picked up after December’s general election, which they hope will translate into rising workloads throughout 2020.

According to the survey, housebuilding was the best performing broad area of construction activity, with output falling only slightly in January. In fact, the housing sector was the strongest performer overall, with the best result since May 2019.

In the meantime, civil engineering was the worst-performing category of output in January, with construction firms often citing a lack of tender opportunities to help replace completed infrastructure contracts.

The survey also found that residential work fell at the slowest pace since May 2019. Commercial activity decreased for the thirteenth consecutive month in January, but the rate of contraction was much weaker than in December and the softest since the start of 2019.

On the flip side, however, average cost burdens increased at a robust and accelerated pace in January.

The latest rise was the sharpest since July 2019 and those polled commented on the impact of higher fuel and haulage costs, alongside increased prices for imported construction inputs.

Jon Stocker, General Practice Partner at Milsted Langdon, said: “Its good to see that the construction sector is finally experiencing growth, but the report reveals that the sector still faces many challenges that it must overcome.

“During these challenging times, it is important to have a trusted advisor that you can rely upon. To find out how our experienced team can help you, please contact us.”

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