Construction industry shows strong recovery

Published:  03 October, 2013

construction, statistics, recovery

The sharpest expansion of construction output for almost six years was noted by the Markit/CIPS Construction PMI for August 2013. Total output rose at the fastest pace since September 2007, with residential construction remaining the strongest-performing sector. The August data showed steep and accelerated expansions of both output and volume of new business. Commercial construction activity increased at the most-marked pace since May 2012.

The Market/CIPS survey showed a sharp increase in incoming new work, at the fastest rate since March 2012.

Figures from the Office for National Statistics (ONS) support Markit/CIPS. The volume of new orders for the second quarter of 2013 is estimated to be 19.8% higher than the first quarter of the year and 32.8% higher than the corresponding quarter a year earlier. There were large rises in construction orders for new housing, with both public and private new housing showing strong growth — enabling all new housing to record its largest growth (19.4%) since the third quarter of 2010 and its highest volume since the fourth quarter of 2007.

ONS estimates that in July 2013, the volume of monthly construction output increased by 2.2% compared with June 2013 — mainly due to a rise in new work of 3.2% , coupled with a small rise of 0.6% in repair and maintenance.

Construction output for July 2013 was 2.0% higher than for July 2012, helped by a 5.8% increase in new work. The rise in new work is in contrast to an estimated 3.6% fall in repair and maintenance during the same period.

Steve McGuckin, UK managing director of construction and project-management consultancy Turner & Townsend, comments, ‘The construction industry is running, not walking, back to health.

‘There is always a lag between wider economic growth and a surge in construction, and this recovery is no different. Construction is back, with pressure already growing on its supply capacity.

‘Output is creeping up, but the pipeline is racing ahead — in the second quarter it jumped nearly a third on the same time last year.

‘While the industry is now more upbeat than it has been for a few years, the best players are facing a new challenge — how to respond to rising demand.

‘Should they go for volume or margin? Following years of consistently weak demand, this is a positive dilemma to have.

‘While the residential sector is the star performer, infrastructure and commercial construction are recording strong order books too. Such an impressive pipeline of work is the best indication that the recovery will be sustained.

‘The construction sector has seen two false dawns already in its slow recovery. The momentum and hugely improved sentiment suggest that we are not about to witness a third.’

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