Housebuilding sees rapid recovery in October

The UK housebuilding sector continued its rapid recovery from the spring coronavirus lockdown in October, according to the latest purchasing managers’ survey from IHS/Markit.

The construction PMI survey, sponsored by the Chartered Institute of Purchasing and Supply (CIPS), found that housebuilding was “by far” the best performing area of construction activity over the month, with the speed of recovery easing only slightly from the level seen in September.

It recorded an index score of 62.4 for housebuilding activity, where a score of 50 represents no growth and anything higher shows activity increasing.

This compares to a headline fall in the index from 56.8 in September to 53.1, as the recovery of construction activity overall across the UK slowed to a five-month low in October.

This meant the rate of expansion was the weakest since June, according to the survey.

Its total activity index fell to 53.1, from 56.8 in September. The index has registered above the 50.0 no-change mark in each month since June.

Explaining the slowdown, Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Activity growth in the construction sector dipped a little in October as supply chain challenges impacted on productivity and some of the momentum from the last few months leaked away.

“Higher levels of purchasing to meet the demands of the biggest rise in new orders since December 2015 were met with roadblocks of material shortages and the highest cost inflation since April 2019. Supplier delivery times acted as a drag on completion as builders rushed to finish work in hand and meet new build requests.”

The month saw a rise in commercial activity, with the index sitting at 52.1, although the latest expansion was the weakest for five months.

But civil engineering activity dropped for the third month running, with the index falling to 36.4. The rate of decline was the steepest since May.

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, said the data showed the construction industry’s recovery was ”resting ever more on the shoulders of Britain’s booming housebuilders.” He said: “With infrastructure work plunging back to levels not seen since the dark days of May and commercial property construction slowing too, residential building is keeping the flame alive.

“Housebuilders aren’t just busy now, they’re racking up orders for the future too. Order books are now fuller than at any time since the pre-Brexit December 2015.”

The survey showed that new orders rose for the fourth time in as many months, with those responding to the survey mentioning a release of pent-up demand. The latest increase was the strongest since just before the UK escalation of the covid-19 pandemic at the end of March.

Mark Robinson, chief executive at Scape Group, said this was significant as England enters a second lockdown, because the sector remained one of the best-placed sectors to drive economic recovery.

He said: “The ramping up of restrictions and the [current] political turmoil in America is likely to further dent interest in private infrastructure investment. As such, public sector projects must continue to be at the forefront of government thinking.”

There was also a further decline in staffing numbers across the construction sector, though the rate of job losses was much slower than in the second quarter of the year.