Construction activity bounces back in January

All parts of the construction sector recorded an increase in activity in January, for the first time since last August, according to the latest monthly Purchasing Managers’ Index from the Chartered Institute of Purchasing and Supply (CIPS).

The index, compiled by research firm Markit, rose to 53.7, up from 49.1 in December, on a scale where any figure over 50 marks growth.

An improvement in weather conditions at the start of the year helped to boost construction work, while there were also gains in new business, CIPS said. Despite rises in both new orders and activity, employment nonetheless fell again.

Civil engineering was the strongest performing category, having seen a slight reduction in activity during December. Commercial based construction activity meanwhile extended its sequence of growth to eleven months. There was a slight increase of house building in January to end a four-month period of contraction.

Optimism regarding companies’ activity levels in 12 months time rose to an eight-month high, and has improved substantially since hitting a low last September.

David Noble, chief executive at CIPS, said: “This is good news for the Government as the construction sector seems to have bounced back, suggesting it was the widespread chaos caused by the snow that had such an impact and hampered growth in December.”

But despite the growth of activity, an “air of caution” persists amongst construction companies as employment levels continue to fall, Noble warned.

“Some companies that are doing well are hiring but many more companies are continuing to adjust to lower workloads and deferral of projects,” he said. “Until growth becomes sustained it is unlikely we will see employment levels rise substantially and consistently.”