Construction output on the rise but commercial still weak

UK construction activity recovered in November with output rising at the fastest rate for five months however the commercial sector is still shrinking, the latest IHS Markit/CIPS PMI has revealed.

The November IHS Markit/CIPS Construction PMI rose to 53.1, up from 50.8 in October and beating forecasts of 51.2.

Tim Moore, director at IHS Markit, said: “UK construction companies experienced a solid yet uneven improvement in business conditions during November.

“Survey respondents noted that residential projects underpinned the rebound in total new order growth to its strongest since June, helped by strong demand fundamentals and a supportive policy backdrop.”

However the survey revealed sustained reductions in commercial building and civil engineering, with the latter now experiencing its longest period of decline since the first half of 2013.

Blane Perrotton, managing director of the national surveyors, Naismiths, said: “In the construction sector, it’s house building that has by far the biggest spring in its step.

“After the Autumn Budget, developers feel like they have the government behind them and that is further boosting confidence and activity levels.

“Residential development is certainly the most active it has been since before the Global Financial Crisis.

“On the frontline we’re seeing a huge amount of activity, especially among small and mid-sized developers, who are making the most of the vastly increased finance options available.

“Office-to-resi conversions are proving the catalyst of the sector, as permitted development rights make it far easier to kick-start projects.

“The combination of a strong jobs market and continued low interest rates is driving demand for new homes, and offers a positive climate for developers.

“Even though interest rates are on an upward trajectory, most in the industry are betting they will be few and far between.”

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Ryan Fowler is the editor of Specialist Finance Introducer