As for many other sectors of the economy, the construction industry has gone through a lot of uncertainty over the past year. Brexit complications and the impact of the pandemic have held up projects, caused workforce issues and introduced new, stringent public health guidelines on site. Plus, sales have almost ground to a halt as buyers disappeared. Now, however, there is scope for celebration with a sharp spike in house building activity that has resulted in the fastest rate of growth in construction activity in nearly seven years and a new record for these pandemic hit times.
Construction growth hits a seven year high
According to the IHS Markit purchasing managers index for March – compiled by CIPS – house building activity in the UK increased up to a score of 64 in March, up from just over 59 in February. On this scale, anything over 50 is an indicator of growth. When the third lockdown was put in place in January the score was just 49.2. At this point the COVID death toll was exceeding anything that had been seen the previous year and restrictions were at their most stringent.
Where are we seeing recovery?
The commercial construction sector has been especially hard hit during the pandemic. Despite this, commercial construction played a big role in the better numbers for March 2021, with output growth in this part of the industry making a strong contribution with a score of 62.7. No doubt the vaccine programme has had a big part to play in this. It has given many consumers the confidence to return to the office and to shops, and has also given commercial clients the impetus to push forward on projects that had previously stalled. A remobilisation across hospitality and leisure has been part of the reason the sector as a whole has achieved its best performance since 2014.
House Building is still a top performer
Across the construction sector as a whole house building still wins best performing category with a score of 64. An increase in workloads has given a boost to jobs in the sector. However, there are some downsides to the boom that is currently under way, including supply chain issues. 41% of firms report that they are experiencing longer delivery times from suppliers in March and costs have spiked upward too with the pandemic and Brexit being cited as the main causes. This means that at present most supply chains are underperforming, something that needs to change if the boom times for the construction sector are going to continue through this year and into the next.
The construction boom in March this year was largely driven by the consistent high performance of house building but supported by a recovery in commercial construction too. Business confidence is also returning and that could prove to be one of the most critical factors in whatever happens next as we emerge from the pandemic – and Brexit – into a still-uncertain future.
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