Lockdown Easing Leads To A Baby Boom

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The latest IHS Markit survey has revealed a steep rebound in UK construction output  - or a mini boom - as more sites reopened and the supply chain kicked into gear as lockdown eased.

House building led the way with the fastest rise in activity for nearly five years, while commercial and civil engineering also joined in the recovery from the low point seen in April.

 “As the first major part of the UK economy to begin a phased return to work, the strong rebound in construction activity provides hope to other sectors that have suffered through the lockdown period.”

– Tim Moore 

Economics Director, IHS Markit

Cautious optimism

While it has taken time for the construction supply chain to adapt and rebuild capacity after widespread business closures, there is now clear evidence that a return to growth has been achieved," continued Moore. "While some survey respondents commented on cautious optimism about their near-term prospects, construction companies continued to face challenges securing new work against an unfavourable economic backdrop and a lost period for tender opportunities.

"At the same time, operating expenses are rising due to constrained capacity across the supply chain and the impact of social distancing measures.

"Looking ahead, construction firms are more confident than at any time since the start of the COVID-19 pandemic. However, the ongoing reductions in staffing numbers seen in June provide a stark reminder that  underlying conditions across the sector are a long way off returning to those seen before the public health emergency."

Stars of the economy

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: "Builders were the stars of the UK economy in June with the fastest rise in purchasing activity in almost five years, as pent-up building plans were unleashed following the easing of lockdown measures."

Housing led the way with the other main sectors closely behind as several larger infrastructure projects were also on the move.

Supplier strain

Brock added: "As business confidence improved to its largest extent since February, companies were buying up materials and laying the groundwork for a stronger summer’s end. This resulted in the highest input price inflation since the start of the year as supply chains creaked under the strain of increased shortages. Building performance is dependent on other sectors recovering at a similar pace and as businesses were opening up, some fell short of their usual delivery capacity.

Increasing health

"Only two months ago the construction sector produced the worst results in the history of the PMI and there are still some potholes to navigate around as government support for jobs is stripped away. Employment levels remained deflated, with reports of redundancies, furloughed staff and a reluctance to boost staff numbers when new order levels remained so flat. But with a significant rise in the headline output number, it looks as though all the building blocks are there for the sector’s increasing health."

Picture: Plans have been put into action that have seen a mini building boom.

Article written by Cathryn Ellis
07th July 2020

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