Construction activity growth continues in October

Construction activity grew for the second consecutive month in October, driven by another solid increase in housing work.

The Markit/CIPS index of purchasing managers hit 52.6 for the month, up slightly from 52.3 in September.

Both months were above the 50.0 mark that separates expansion from contraction and followed three months from June to August where activity slumped due to uncertainty surrounding the EU referendum.

Tim Moore, senior economist at Markit, said the recent growth in activity was encouraging but noted that the recent phase of growth “has been the weakest for three-and-a-half years”.

He added: “Survey respondents noted that Brexit-related uncertainty and concerns about the UK economic outlook had held back investment spending.”

In further bad news, business confidence dropped to its second-lowest reading since May 2013, while input costs rose at one of the fastest rates in five years, linked to the weaker pound.

Civil engineering and commercial building struggled for momentum in October, but this was offset by solid growth in housing.

Commenting on the figures, Mark Robinson, chief executive of contracting authority Scape Group, said: “The industry is trying to get back to business as usual and it’s positive to see new orders increasing for a second consecutive month, albeit at a slower rate of growth than in September.”

Max Jones, global corporates relationship director for construction at Lloyds bank, said: “Although we are still some time away from a shovel hitting the ground at Heathrow, the long-awaited decision on a third runway was a welcome boost, particularly coming so soon after Hinkley Point received the green light.

“Yet of more immediate interest to the sector is the impending Autumn Statement. Construction firms hope the chancellor will announce a wave of spending on Britain’s infrastructure, particularly road and rail schemes which can be started imminently.”