Housebuilding activity grew in December despite fears over Omicron variant

The housebuilding industry saw the strongest growth of any part of the construction industry in December despite growing fears over the impact of the Omicron covid variant, according to the latest information from purchasing managers.

The latest purchasing managers’ index from the Charter Institute of Purchasing and Supply (CIPS), found that residential construction activity grew at a marginally faster rate in December than in November, with the index rising to 55.3, up from 54.7 the previous month.

The index, drawn up by IHS Markit, is calculated so that any number above 50 represents growth in activity. However, the growth remained well below the very high levels of growth seen in the spring and summer this year, when the index rose as high as 68.2 in June.

However, the report said the growing number of cases and people being forced to self-isolate blunted construction growth in December overall with the index for all construction posting a score 54.3 – down from 55.5 in November – the weakest growth for three months.

Omicron first appeared in late November and Tim Moore, director at IHS Markit, said: “UK construction companies ended last year on a slightly weaker footing as renewed pandemic restrictions held back the recovery, especially in commercial work and civil engineering. Some firms commented on disruption from rising covid-19 cases.”

Max Jones, a director of Lloyds Bank’s infrastructure and construction team, added: “While Omicron is front of mind for contractors, it’s not the threat of a full lockdown, which looks peripheral, but a surge in cases that could halt work on projects that’s the worry. If that combines with a weather-induced slowdown it could make for a volatile start to the new year.”

The chief executive of Scape, Mark Robinson, admitted that sites could find it difficult to plug gaps if workers were forced to quarantine at home in droves. He said: “As with other sectors, rising Omicron case numbers will further squeeze the supply of labour.”

And KPMG head of infrastructure, building and construction Jan Crosby warned: “Any tightening of restrictions or workers needing to self-isolate will likely result in project delays or even the temporary closure of some sites.”

The number of NHS England off sick with covid last week was more than 35,500, a level last seen in January 2021, while the number of daily cases yesterday was close to 180,000.

But there was better news on the supply issues which dogged the industry throughout last year as the number of firms reporting problems fell from 47% in November to 34% last month.

The figure is down markedly from the 63% who were saying the same thing in September and significantly below the 77% peak recorded in June.

Residential construction was the only category to gain momentum in December, with the index increasing from 54.7 in November to 55.3.

Commercial fell nearly three points to 53.6 while civil engineering activity went into reverse with a score of 49.1 which was down from 53.9 in November, ending a nine month period of expansion.