Construction purchasing managers have reported an unexpected upturn in new orders during June.
The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) revealed a solid expansion in construction activity during the month, underpinned by more residential work and a faster upturn in commercial building.
It was the strongest rise in new orders since May 2017 as well as the largest upturn in input buying for two and a half years.
The PMI posted a score of 53.1 in June, up from 52.5 in May and above the 50.0 no-change value for the third month running.
The latest reading made for the sharpest overall rise in output since November 2017.
Civil engineering activity rose only slightly in June, with the rate of growth slowing to a three-month low.
However, average cost burdens also increased at a sharp pace in June. The latest increase in input prices was the steepest for nine months, which construction companies attributed to greater transportation costs and higher prices for metals (especially steel).
Nonetheless, there was a rebound in business optimism from May’s seven-month low, although positive sentiment is still weaker than the long-run survey average.
Tom Moore, associate director at IHS Markit and the author of the IHS Markit/CIPS Construction PMI said: “The latest increase in UK construction output marks three months of sustained recovery from the snow-related disruption seen back in March. A solid contribution from house building helped to drive up overall construction activity in June, while a lack of new work to replace completed civil engineering projects continued to hold back growth.
“Of the three main categories of construction work, commercial building was sandwiched in the middle of the performance table during June. Survey respondents suggested that improved opportunities for industrial and distribution work were the main bright spots, which helped to offset some of the slowdown in retail and office development."
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “With the fastest rise in new orders since May 2017, it appears the brakes are off for the construction sector. Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects and hesitancy was swept away.
“Input prices were a challenge with the biggest inflationary rise since September 2017, so the pressure was on to build up stocks of materials rising in price and becoming more scarce. This resulted in a heavy impact on suppliers unable to keep pace as deliveries became laboured and purchasing managers were at their busiest for two and a half years."
