News

UK Construction PMI - February 2021

04-03-2021

 - Construction sector rebounds in February amid boost from commercial work
 - Recovery in total output restarts during February
 - Increase in commercial activity helps offset housing slowdown
 - Fastest rise in cost burdens for more than 12 years

UK construction companies experienced a solid return to growth in February after a setback at the start of 2021, according to the latest PMI data compiled by IHS Markit. New orders also regained momentum as project starts increased in anticipation of improving UK economic conditions over the course of the year.

Extended supplier lead times persisted in February as vendors struggled with transport delays and stronger demand conditions. Stretched global supply chains, greater shipping charges and rising commodity prices all contributed to the sharpest increase in average cost burdens across the construction sector since August 2008.

The headline seasonally adjusted IHS Markit / CIPS UK Construction Total Activity Index posted 53.3 in February, up from 49.2 in January, to signal a solid increase on overall construction output. The index has registered above the 50.0 no-change mark in eight of the past nine months.

Residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January. There were some reports citing temporary delays on site arising from adverse weather and supply chain issues (especially for timber).

The slowdown in house building was more than offset by the sharpest rise in commercial work since last September and a slower fall in civil engineering activity. Survey respondents commented on contract awards for commercial building that had been delayed & earlier in the pandemic and some reported a boost from infrastructure work related to major transport projects.

New order volumes increased for the ninth consecutive month in February and the rate of expansion accelerated from the subdued pace seen at the start of the year. Construction companies cited improving demand across a range of sources, including residential development, new opportunities in the commercial segment and public sector infrastructure spending.

Greater workloads encouraged additional staff recruitment. Although only modest, the rate of job creation was the fastest since March 2019. Similarly, input buying picked up as construction firms prepared for new project starts. Improving order books and early signs that the vaccine rollout will release pent up demand also led to the strongest degree of construction sector optimism for over five years.

Meanwhile, purchasing prices increased at a rapid pace in February. Survey respondents cited an imbalance of demand and supply, alongside inflationary pressures from the pass through of higher transportation costs.

 

Source: www.markiteconomics.com