It is now beyond a shadow of a doubt that the UK housebuilding industry is in sustained growth mode with the latest Markit/CIPS construction PMI report showing an incredible 15th consecutive month of growth.
The report also showed that activity in the whole construction sector, which includes commercial property and civil engineering, also grew for the 12th month in a row, albeit at a slower pace than in the last in 6 months.
All involved in the construction industry are experiencing a much better year in 2014 and this is continued good news for merchants and manufacturers of building and construction products.
Great news for employment
It is confirmation that growth in the sector is both strong and consistent and that confidence is flowing through the industry. More than half (56%) of construction companies anticipate a further rise in output in the next 12 months while just 5% predict a fall and this is supported by the fact that construction industry recruitment has now increased for the11th month running.
The rate of expansion of residential construction was one of the fastest seen over the past 10 years and the 15-month period of continuous housebuilding growth is the longest sustained period since 2006-07.
Commercial activity also increased in April, but growth of civil engineering activity was its slowest since September 2013.
Tim Moore, senior economist at Markit, said:
“Better economic conditions, a surge in housebuilding, improved access to finance and greater investment spending are all important tailwinds for UK construction growth this year. Moreover, the latest survey is another indication that current UK construction trends are healthier than the relatively meagre official growth estimates so far this year.
“April’s survey indicated that residential building was the fastest growing area of UK construction activity, with the latest expansion correlating with at least 45,000 new housing starts per quarter. While there looks to have been a further steep upturn in new house building starts in April, the trend remains well short of estimated increases in underlying demand each year.
“Set against the tightening supply chain backdrop, a difficult challenge lies ahead for the housebuilding sector to make sure it doesn’t hit a ‘brick ceiling’.”
CIPS chief executive David Noble added: “While the rate of growth slowed slightly in April, the construction sector is still experiencing a remarkably strong and consistent period of expansion. Positive news abounds as housing activity reached a near ten-year high and the sector as a whole benefited from the sharpest rise in new business since January this year. This, alongside improving economic conditions, continued to drive strong job creation, giving further cause for optimism about the future.
“House building was again the leading light in April, with growth now running for the longest continuous period since 2006/2007. This was further supported by a solid expansion in commercial activity; meanwhile civil engineering showed some signs of moderation, as companies looked for new work to replace flood relief activity.
“Reflecting the fast pace of growth filtering through the supply chain, vendor performance in April continued to deteriorate, typified by shortages of capacity, low stocks and worsening lead times. Beyond this, the easing of cost inflation this month was acknowledged to have brought some relief to the industry.”