Construction activity up in October

Construction activity has continued to accelerate in the UK, with house building helping drive this recovery according to latest market data.

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The IHS Markit/ CIPS UK Construction Activity Index registered 54.6 in October, up from 52.6 the previous month, signalling a ‘robust and accelerated rise in output volumes’ after September’s eight month low.

The index shows house building replaced commercial work as the best-performing category in October, with the latest increase in residential work the strongest it has been for three months.

Since the spring the construction industry has had problems with severe shortages of staff and materials. The report says despite increased activity some problems still  persist.

More than half of the survey panel (54 per cent) reported longer delivery times among suppliers in October, while only 2 per cent saw an improvement.

Delays were overwhelmingly linked to haulage driver shortages and international shipping congestion. However, the number of construction firms reporting longer wait times for supplier deliveries was down from 63 per cent in September and a peak of 77 per cent in June.

Despite these issues, the near-term outlook for construction growth remained positive in October. Just over half (52 per cent) forecast an increase in output during the year ahead, while only 8 per cent expect a decline.

Naismiths director Gareth Belsham says: “After its post-peak Autumn wobble, the construction industry is settling back into a good rhythm.

“Output has risen across the board, with housebuilders reclaiming the top spot as the industry’s star performers.

“Building firms remain largely positive about what the future holds, with over half still forecasting further growth over the next 12 months.

“In large part that optimism is being driven by the sense that input cost pressures are dissipating. Serious shortages of key materials and skilled workers have been pushing up prices and increasing delays since spring, but in October inflation softened to its lowest level in six months.

“Construction firms are very busy right now, but new orders are coming in at a more modest rate than they did earlier this year.

“The easing of inflationary pressure will be a huge relief for the industry – for a time there was a real danger it might choke off growth. Overall though this is encouraging – a return to business as usual, if not a return to the boom seen over summer.”

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