State of the market: Becalmed waters but no plain sailing

Chloe McCulloch

A surge in optimism is wonderful to see, but material price inflation could put a brake on construction’s rebound

There is a buzz in the air this week as easing covid restrictions allowed people to shop for non-essential items, meet up for outdoor drinking and, perhaps most pressing of all, finally get a haircut. And the upbeat mood has been matched in the world of construction: our own survey shows industry optimism about future work prospects has jumped by 90% compared with the dark days at the end of last year. Official figures suggest there are good reasons to be cheerful, growth in new commercial work has helped construction output reach its highest level in six months. February’s GDP figures show output across the whole industry grew 1.6%, one of the strongest parts of the economy, which recorded a more modest 0.4% increase.

Clearly, we are not back to where we were before the pandemic, but the economy is beginning to reopen thanks to a successful UK vaccine rollout, which has met its target of offering all the over 50s a jab by the middle of this month. That is quite an achievement.

It is particularly heartening to see confidence returning to the commercial sector. The latest IHS Markit/CIPS data also revealed the strong rebound many had been predicting – with its highest score from purchasing managers since September 2014 – as work resumes on stalled office jobs and the hospitality and leisure sectors reopen.

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