Buyers report sharpest rise in construction output since 2014

The recovery in UK construction has accelerated, with output expanding at its sharpest pace since September 2014, according to the latest survey of buyers in the sector.

The IHS Markit/CIPS UK Construction Total Activity Index registered 61.7 in March, up from 53.3 in February (where a score of 50.0 indicates no change), driven by “robust” rises in house building, commercial work and civil engineering.

House building was once again the best performing category (64.0), with growth at its fastest rate since July 2020. Commercial construction registered a score of 62.7, and civil engineering reached 58.0, making the index readings for both segments the highest since the second half of 2014.

According to survey respondents, the rise in activity was often as a result of the mobilisation of delayed projects, especially in areas such as hospitality, leisure and office development.

There was also a steep rise in new orders during March and the rate of job creation was the strongest for over two years in March.

Meanwhile, higher demand for construction products and materials has contributed to longer wait times for deliveries by suppliers, with around 41% of the survey panel reporting longer delivery times from suppliers in March, while only 1% saw an improvement.

Tim Moore, economics director at IHS Markit, which compiles the survey, said: "March data revealed a surge in UK construction output as the recovery broadened out from house building to commercial work and civil engineering. Total activity expanded to the greatest extent for six-and-a-half years as residential spending remained robust, commercial projects restarted and infrastructure contract awards moved ahead.

"Improving confidence among clients in the commercial segment was a key driver of growth, with development activity rebounding in sectors of the economy set to benefit the most from the improving pandemic situation. The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects.

"Continued pressures on supply chains are expected in the near-term, but these concerns did little to dampen confidence about the business outlook. The latest survey pointed to the strongest growth projections across the UK construction sector since those reported during a post-election bounce back in June 2015."

Mark Robinson, group chief executive at public sector procurement authority Scape, said: “The construction industry continues to resist the shock of the pandemic in an impressive fashion and position itself at the forefront of the economic fight back. The sustained output growth recorded in March is a far cry from the record-low levels reported this time last year, reaffirming just how far the industry has come since the first lockdown.

“As the UK progresses out of lockdown, it’s critical now that we build on the lessons learned over the past 12 months. Backed by the Construction Playbook, every project must contribute towards a better future and add positive value to the local community. To that end, it’s encouraging to see the government committing to a new inquiry to shape and accelerate the industry’s net-zero capabilities, as it looks to truly build back better.”

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