Business booms for the construction industry

New home deck construction

House-building, commercial projects and infrastructure work have all been displaying strong growth in the latest snapshot of the construction sector, which accounts for around 6 per cent of total UK output. This is according to the latest IHS Markit/CIPS (Chartered Institute of Procurement & Supply) UK Construction Total Activity Index, which registered 61.7 in March, a sharp increase from 53.3 in February.

House-building (index at 64.0) was the best-performing category, with growth the fastest since July 2020, and a strong increase was seen in commercial construction (62.7).

Survey respondents highlighted re-starting of delayed projects, especially in areas such as hospitality, leisure, and office development. However, the result of these increases in activity has been higher demand for construction products and materials, which has led to longer wait times for deliveries by suppliers. Around 41 per cent of the survey panel reported longer delivery times from supplies, while only one per cent saw an improvement. Purchasing prices rose at their steepest level since August 2008, with suppliers citing both Brexit and COVID-19 as reasons for price hikes in May.

Duncan Brock, Group Director at the CIPS, said: “Construction was full of the joys of spring in March with a sudden leap into solid growth fuelled by across the board rises in workloads in all sectors.

“Business confidence was also standing tall with future optimism about the next 12 months the highest since June 2015 which suggest it is mostly plain sailing now that lockdowns are ending and vaccine programmes are underway.”

However, Duncan highlighted the following: “Supply chains are still underperforming and almost half of the survey respondents said they had experienced longer delays and higher costs. If this continues, it could easily cool the sector down a notch.”