Construction’s covid recovery slowed in August

The volume of construction work undertaken in the UK continued to recover in August but grew at a slower pace than July, according to the latest monthly purchasing managers' survey.

Housing construction work remained the fastest growing sector - having been the hardest hit earlier in the year - as respondents to the latest IHS Markit/CIPS survey said overall that a lack of new work to replace completed contracts had acted as a brake on the speed of expansion.

The headline seasonally adjusted IHS Markit/CIPS UK Construction total activity index registered 54.6 in August, down from 58.1 in July. Any figure above 50.0 indicates growth of total construction output.

While growth in activity has been recorded in each of the past three months, the latest expansion was the weakest over this period.

Housebuilding has registered the strongest rebound since the stoppages of work on site in late-March due to the coronavirus pandemic. This tren continued in August, with the seasonally adjusted housing activity index sitting at 60.7.

The equivalent figures for commercial work, 52.5, and civil engineering activity, 46.6, were notably weaker than the headline index in August, with the latter actually contracting.

All three broad categories of construction provided a weaker contribution to the headline index in comparison to those seen in July.

Tim Moore, economics director at IHS Markit, said: “Another month of widespread job shedding highlighted the ongoing difficulties faced by UK construction companies, with order books often depleted due to a slump in demand from sectors of the economy that have experienced the greatest impact from the pandemic.”

Total new business volumes increased for the third month running during August, but the rate of expansion remained only modest and slowed since July.

Construction companies said economic uncertainty and a wait-and-see approach among clients had limited their opportunities to secure new work.

Mark Robinson, chief executive of Scape, said while continued growth, albeit weaker growth, was a positive sign for construction, the long-term picture remained uncertain.

He said: "With private capital likely to be less forthcoming in the coming months, the public sector must continue to be the driving force behind the sector’s output."

Robinson said for this to be achieved the next round of planned ‘build, build, build’ projects needed to be revealed and progressed quickly.