IHS Markit: Construction output on the rise

Jake Carter

March 3, 2020

Construction output noted a rise in activity over the course of February following a nine-month period of decline, according to IHS Markit data.

The data shows that construction output was recorded at 52.6 in February, up from 48.4 in January.

Furthermore, the latest reading outlines that the overall rate of construction output growth was the fastest for 14 months.

Residential activity remained the best-performing construction category. Commercial work also grew in February, with the sub-sector posting its fastest increase in business activity since November 2018.

Meanwhile, civil engineering activity declined last month, however, it was noted at the smallest fall for the past 13 months.

Furthermore, the increase in new work was the greatest recorded in over four years, demand for sub-contractors increased for the second consecutive month, and purchasing activity returned to growth in February.

Tim Moore, economics director at IHS Markit, said: “February’s survey data adds to signs that the UK construction sector has started to rebound after a downturn through the second half of last year.

“Growth of business activity was stronger than at any time since the end of 2018, supported by the fastest rise in new orders for just over four years. Some construction firms suggested that the recovery in output would have been even stronger had there not been disruptions on site from severe weather conditions in February.

“There were widespread reports that pent-up demand released since the general election had helped to boost workloads, especially in relation to house building and commercial construction projects. Civil engineering activity moved another step closer to stabilisation in February.

“A number of survey respondents commented that contract awards from HS2 and other major transport projects had the potential to boost infrastructure work at their businesses in the year ahead.

“While construction order books have begun to recover in the opening part of 2020, the fly in the ointment is the uncertain impact of the coronavirus outbreak on UK economic growth prospects. A renewed slowdown could see domestic investment spending put back on hold and dampen the outlook for the UK construction sector.”

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