UK Construction Market Remains In "Expansion Mode"

October data has highlighted another upturn in overall UK construction output, alongside a rebound in new order growth and the fastest pace of job creation for almost a year.  Commercial building work was a key growth driver in October, as housing and civil engineering activity both expanded at slower rates than in September.

Despite a robust and accelerated rise in input buying, latest data indicated the lowest strain on supplier delivery times for almost five years. Meanwhile, relatively subdued cost inflation continued in October, helped by falling raw material prices (especially metals).

The headline seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered 58.8 in October, which was down from 59.9 in September but still well above the 50.0 no-change threshold. As a result, the latest survey marked two-and-a-half years of sustained output growth across the UK construction sector. While the pace of expansion remained weaker than seen on average in 2014, the latest reading was comfortably above the pre-election low recorded in April (54.2). Higher levels of activity were recorded across all three broad categories of construction monitored by the survey. However, housing activity growth eased from September’s 12-month high, and the latest rise in civil engineering was the slowest since May.