Mixed picture of construction activity

Glenigan, Markit

A mixed picture of construction-industry activity for the end of last year has been reported by major industry analysts. The Markit/CIPS UK construction purchasing managers’ index (PMI) reported a ‘robust and accelerated expansion of overall business activity, thereby indicating a rebound from the slowdown recorded in November’. Glenigan, in contrast, reported new construction activity contracting by 14% in the final quarter of 2015 compared to a year earlier.

The headline seasonally adjusted Markit/CIPS PMI registered 57.8 in December, up from a 7-month low of 55.3 in November. Higher levels of construction output have been recorded by the survey since May 2013, but the overall rate of expansion remained slightly weaker than seen on average over this period.

Commercial construction remains the best-performing sub-category of activity in December, with the latest upturn the fasted since October 2014.

Survey respondents noted that improving UK economic conditions continued to boost demand for commercial projects. Housing activity also increased at a robust rate that was much stronger than the 29-month low seen during November.

Anecdotal evidence cited an improving flow of development opportunities and new innovations to tender.

Glenigan’s figures indicated the value of new work starting on site falling across the residential, non-residential and civil-engineering sectors. Over 2015 as a whole, starts were down 4%, with both non-residential and civil engineering having declined. This is the first annual decline recorded by Glenigan since 2009, and follows growth of 10% in 2014.

Some sectors saw rises in project starts during 2015. They were private housing, industrial, education and utilities.

Allan Wilén, Glenigan’s economics director, observed, ‘The value of work receiving detailed planning approval increased by 15% in 2015, but this has failed to translate into workers on site.

‘There is a significant pipeline in place to fuel construction growth in 2016. However, clients are currently not pressing ahead with planned schemes at the same rate we witnessed in 2014.’

The Midlands and northern regions of England fared best during 2015. The East Midlands, east of England and north east of England were the only three parts of the UK to record growth over the year, though declines across the other northern and Midlands regions were modest. In London, southern England and Scotland the decline in new work has been more stark. The value of starts fell by 11% in London in 2015.

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