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Sustained business activity recorded in construction sector for October
Sustained business activity recorded in construction sector for October

Sustained business activity recorded in construction sector for October

Construction companies in the UK recorded sustained business activity in October, according to the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI).

According to the latest release in the monthly series, the overall rate of activity was 53.2, which is an increase from the 52.1 recorded in September.

The PMI is still above the no-change mark of 50.0, which represents neither negative nor positive output in the construction industry.

It signifies sustained business activity because this is the second strongest rate of expansion in the construction sector for 16 months.

Although below the long-run PMI average of 54.3, construction output has increased in every month since April; the main drivers in October were the start of new contracts, overseas work, and general business increases.

Surprisingly for the construction sector, civil engineering was the prime reason for the overall upturn in the rate of construction activity in October.

Having decreased in August and September, the sub-sector bounced back to record growth at its strongest pace since July 2017.

For housing and commercial meanwhile, growth in these sub-sectors was recorded at what has been described as “solid rates.”

However, for housing, this is the weakest rate of growth for seven months, and commercial, it is five months.

It means that civil engineering was the best-performing sub-sector since January.

Despite this headline good news, IHS Markit has downplayed the figures, pointing to other factors that “paint a less rosy picture.”

Trevor Balchin, Economics Director at IHS Markit, commented: “Although total construction activity rose at a stronger pace in October, the underlying survey data paint a less rosy picture for the sector towards the end of the year.

“New contracts increased at only a modern pace and firms were the least optimistic regarding the 12-month outlook for nearly six years.

“Construction companies again linked uncertainty to Brexit negotiations, which influenced delays to final decisions at clients.”

Resolving these issues is key if sustained business activity is to continue.

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