Construction firms enjoyed a hugely successful 2013, with the Help to Buy scheme introduced in the latter part of the year contributing significantly to the number of projects underway.
However, the latest data released by the Markit/CIPS Purchasing Managers’ Index (PMI) relating to December indicates that commercial construction is beginning to catch up with residential construction as confidence in the sector increases.
The data shows that UK construction output remained positive during December, although the reading of 62.1 was a slight contraction on the peak of 62.6 in November. However, this remained marginally ahead of economist predictions set at 62.0, meaning that further growth is likely as spring advances. As any reading over 50 indicates the presence of growth, the latest set of results is good news for construction firms.
Markit and CIPS believe that the strengthening recovery of the UK economy has greatly contributed to improvements within the construction industry, especially within the commercial sector.
An extract from the report said; “Construction companies noted that improving business conditions and greater confidence in the economic outlook had boosted spending among clients during December.”
Commercial construction certainly made up for its sluggish period both during and in the aftermath of the recession, narrowing the gap between itself and the housing market. In fact, it posted the fastest levels of growth since August 2007, largely due to the number of stalled projects now being kick-started.
Civil engineering activity managed to maintain its positive results from November, hinting towards a steady growth as 2014 progresses. And while housing stalled marginally during the month, it remained the fastest growing of the three categories thanks to high nationwide demand.
Markit senior economist Tim Moore believes that December’s results mark the beginning of a more widespread growth throughout the construction industry.
He says; “The latest survey highlights that construction companies enter 2014 with the wind in their sails.
“Most encouragingly, the improving UK economic outlook is helping boost private sector spending patterns, meaning that the construction recovery has started to broaden out from housing demand and infrastructure projects to include strong growth in commercial building work.”
The success of the past eight months also seems to have had a positive effect upon business confidence within the construction sector, especially when it comes to recruitment which rose for the seventh consecutive month. In turn, 57 per cent of construction companies now believe that their output levels will rise during the next 12 months, compared to the 31 per cent answering in this way at the same time last year.
With the UK economic recovery continuing to gather pace there is every indication that growth in the construction industry will continue into 2014.
