Construction sector grows for 12 consecutive months

The UK’s construction sector saw growth last month to levels not seen since August and marked 12 months of consecutive rises for the industry, according to new data.

The closely-followed IHS Markit / CIPS purchasing managers index (PMI) hit 56.3 in January, up from 54.3 in December. Anything above 50 is seen as a sector in growth.

Bosses said the growth came despite the sector suffering from increased lead times for supplies, along with staff shortages and haulage availability, as the Omicron variant knocked businesses.

However, they added that the peak of supply chain problems caused by the Covid-19 pandemic appear to have passed – with availability of products appearing to ease.

And whilst raw material prices, energy costs and transportation bills remain high, the speed of the price rises appear to be slowing, bosses reported.

Commercial projects saw the strongest growth during the month, according to the report, rising to a six-month high.

This was down to high client demand as building projects put off due to economic uncertainty last year were given the green light as the outlook became clearer.

The report said survey respondents found there was optimism among clients due to the rolling back of Covid restrictions.

Housebuilding saw more muted growth, increasing at the slowest pace for four months, whilst civil engineering returned to growth having fallen in December.

During the period, the extra work also increased the number of jobs available with additional hires and job creation at highs not seen since October.

Tim Moore, director at IHS Markit, which compiles the survey, said: “UK construction companies started the year on a strong footing as business activity picked up speed and new orders expanded to the greatest extent since last August.”

He added: “Higher energy, transport and raw material bills led to across the board increases in input prices during January, but fewer supply issues helped ease the overall rate of cost inflation to its lowest since March 2021.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), added: “There was some light at the end of the tunnel where supply chains showed signs of improvement and the best delivery times since September 2020.

“However, the rapid upturn in activity is putting more pressure on suppliers still in recovery while there are shortages in skilled labour and a lack of reliable transportation adding to their woes.

“Thirty-four per cent of supply chain managers said their materials were taking longer to arrive and as a result purchasing activity escalated in an effort to beat price hikes and shortages.”