Construction might have been hit hard when COVID-19 spread across the globe, but with health and safety guidelines being adhered to construction finally has some good news after months of uncertainty. The industry accelerated at its fastest rate in nearly five years in July, this is based on data collected from a survey of construction buyers.
As businesses and supply chains began to get back to business in the construction market The IHS Markit/CIPS UK Construction Total Activity Index saw a rise in June to 55.3 compared to 28.9 in May and July which had recorded a score of 58.1. Main activity in July was for residential buildings, the most activity seen since September 2014 as demand increased and buyer anxiety reduced. Followed closely by accelerated rates in June for commercial and civil engineering work, this is mainly attributed to the catch-up in delayed work during the lockdown period.
Volumes of new business enquiries rose slightly in June, ending a three months period of decline, although the rate of new order growth was far weaker than seen for business activity, showing there is still some uncertainty and caution among clients leading to longer lead times to secure new contracts. It was noted in the survey that some construction firms saw new leads and work were related to infrastructure projects which were key to growth in June.
Although it is positive to see growth and activity over the past few months there is still caution within the industry as employment numbers fell at the end of the second quarter. It appears that there is some uncertainty with hiring and doubts over furlough arrangements and potential redundancies amongst businesses.
The year ahead remains uncertain, although the survey recorded that 46% of businesses anticipate a rise in business activity, 31% forecast a reduction. The 31% commented that their main concerns were about the wider UK economic outlook. The industry did see further supply chain disruption reflecting stronger demand for construction inputs and continued reports of severely restricted materials such as plaster and now underlay, these constraints have led to another rise in purchasing costs, with this, inflation has now risen to its highest since the start for 2020.