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UK house-building pushes construction sector growth to 5-month high

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UK house-building pushes construction sector growth to 5-month high

Residential building activity helped push the U.K.'s seasonally adjusted construction purchasing managers' index to a five-month high of 53.1 in November, up from 50.8 in October, data from IHS Markit/CIPS showed.

While new orders and employment numbers also rose by the most in five months, the rebound was limited to the residential sector. Commercial building posted the weakest performance in November and the civil engineering sector continued its longest declining trend since the first half of 2013, the survey noted.

Survey respondents linked the residential sector's performance to resilient demand and a supportive policy backdrop, while Brexit-related uncertainty and the subdued economic outlook squeezed commercial-sector spending capacity.

Staff numbers and input buying rose moderately in November, and lead-times for materials and final products lengthened sharply due to pressure on supplier capacity. However, cost inflation eased to its lowest point in 14 months.

The degree of optimism regarding the year-ahead outlook for construction activity picked up from October's 58-month low but remained among the most subdued since mid-2013.

November met "the first improvement in confidence for three months, which construction firms attributed to increased sales inquiries and hopes that risk aversion among clients will recede over the course of next year," said Tim Moore, associate director at IHS Markit.

"It is private sector companies that need to commit to big ticket spending, with commercial development still underperforming as persistent Brexit uncertainty continues to bite," said Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply.

The British manufacturing sector also came in with strong results in November, with its seasonally adjusted purchasing managers' index up at a four-year high of 58.2, data from IHS Markit/CIPS showed Dec. 1.