UK construction sector expands at fastest pace in 24 years


  • UK construction output registered the strongest rate in the last 24 years
  • The IHS Markit/CIPS Construction PMI jumped to 66.3 in the month of June
  • House building projects surged at the strongest rate since November 2003

The phased reopening of various sectors according to the planned easements laid out by the Downing Street administration have significantly helped in reviving the economic downturn. Extending the path of continuous recovery, the construction sector in the United Kingdom has registered the strongest rate of output in the last 24 years.

According to the data released by the IHS Markit/CIPS, the Construction Purchasing Managers’ Index (PMI) jumped to 66.3 in the month of June 2021. As per the historical statistics, this has been the sharpest rate of output growth in the constructions sector since June of 1997. Of late, most of the macroeconomic indicators have duly substantiated the sharp bounce back in the national economy.

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The sharp recovery in the construction output has been primarily driven by house building and commercial work. However, there was a delay in the deliveries with the suppliers’ delivery time escalating to the highest peak in more than 24 years. Notably, the strong increases in the business activity collectively led by all the three main areas of construction also resulted in severe shortage of products and materials.

Of the three areas, the construction work related to house building surged at the strongest rate since November 2003, while the commercial work development emerged as the second-best performing area, recording the fastest growth rate since March of 1998, the IHS Markit/CIPS survey showed. The growth rate of civil engineering activity eased to a three-month low, even after witnessing a mega rise in June.

Following the massive reopening in the UK with most of the indoor and outdoor settings restarting their commercial operations on a bigger scale, there was a sharp increase in demand for new construction work with the residential and commercial projects making a substantial positive contribution, the survey respondents in the survey said.

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Subsequent to the initial relaxations effectuated after the first national lockdown, the total new orders have surged consecutively for the last 13 months. The expansion in the new orders in June remained lower that that of May, the month in which the gauge registered a record high reading.

The continuous amplification of the output has collectively supported the jobs, paving the way for new employment opportunities as the construction companies indicated towards a sharp increase in rising employment numbers in order to boost capacity that can meet the increased demand.

The construction and real estate enterprises have once again cited shortage of stocks with the vendors, mostly for the products and materials that are imported from the EU (European Union) region.  Construction companies overwhelmingly cited stock shortages among vendors, reflecting severe delays with shipping and haulage, especially for products sourced from the EU.