Pent-up demand is reviving the UK construction industry

Pent-up demand for the start of construction projects emerged in September, new data shows, leading to the fastest growth in new construction investments since before the lockdown.

This growth was offset by a decline in the number of civil engineering projects, which has yet to recover but was enough to boost growth across the UK construction sector, as shown by the latest IHS Markit/CIPS UK Construction PMI.

September saw a PMI score of 56.8 – any score above 50 is seen as a sector in growth – beating the 54.6 recorded in August for the closely watched index.

Eliot Kerr, an economist at IHS Markit, which produces the survey, said: “There was faster growth in activity in both the residential and commercial subsectors, which more than offset the sharper decline in engineering work.

“Forward-looking indicators point to a sustained increase in activity, with new business volumes growing at the fastest pace since pre-lockdown and sentiment on the 12-month horizon at a seven-month high.”

There was a decline in employment in the sector, although the study showed that the rate of layoffs had slowed significantly.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said the construction sector outperformed manufacturing and services industries, growing purchasing activity at the fastest rate in five years.

“Driven by the easing of restrictions, new orders grew for the fourth month in a row and at the fastest pace since the beginning of the year before the outbreak of the pandemic,” he said.

“Of the three subsectors monitored, residential construction was the best performer, with activity increasing for the second month in a row, driven in part by housing-related services such as home renovations.

“However, civil engineering took another step backwards, and progress deteriorated significantly as major construction projects remained in limbo.”

Optimism is at a seven-month high and construction companies are happy to see activity pick up again after summer lows, Brock added.