Construction sector performance rebounds in December
Commercial building leads the way as 2015 ends with expansion of overall business activity
UK construction companies ended 2015 with a robust and accelerated expansion of overall business activity, indicating a rebound from the slowdown recorded in November.
The headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered 57.8 in December, up from a seven-month low of 55.3 the previous month.
Commercial construction remained the best performing sub-category of activity in December, with the latest upturn the fastest since October 2014.
Survey respondents noted that improving UK economic conditions continued to boost demand for commercial projects. Housing activity also increased at a robust rate that was much stronger than the 29-month low seen during November.
Meanwhile, a decline in civil engineering activity contrasted with the overall upward trend seen across the UK construction sector in December. The fall in civil engineering activity was only marginal, but ended a seven-month period of sustained growth.
Just over half of the survey panel (51%) anticipate a rise in business activity over the course of 2016, while only 7% forecast a reduction. Although this indicated the weakest degree of positive sentiment since February 2015, the index remained well above its post-crisis average.
Commenting on the findings, Tim Moore, senior economist at Markit and author of the Market/CIPS Construction PMI, said: ‘UK construction companies finished 2015 in a positive fashion, as overall output growth recovered from November’s seven-month low.
‘Commercial building was the main engine of growth, with this area of activity expanding at the strongest pace since autumn 2014. There was also a rebound in house-building activity in December, but momentum was still much softer than the post-crisis highs achieved during 2014.’
He continued: ‘Civil engineering remained the weakest-performing area of construction in December. Nonetheless, civil engineering activity looks set to experience a near-term spike at the turn of 2016 from spending related to flood relief and additional capital budgets.
‘Across the UK construction sector as a whole, the latest survey indicated a strong degree of optimism about the outlook for 2016, with firms mainly citing a strong pipeline of commercial development projects and new housing starts.’
