UK construction companies signalled a positive end to last year, led by the fastest rise in new order volumes since January 2016. Stronger demand patterns resulted in sustained job creation and an upturn in business activity during December. However, the construction sector continued to experience intense cost pressures as suppliers passed on higher imported raw material prices.
The study by the purchasing managers’ index (PMI), a survey from IHS Markit, showed builders increased their output in December at the fastest pace since March – before the stamp duty hike on landlords, and before the EU referendum. The latest rise in overall input costs was the steepest for just over five and a-half years.
Orders for residential property were particularly strong last month and the UK’s construction sector ended 2016 well, expanding at the fastest pace for nine months in December, according to the survey. This came as suppliers passed on the higher costs of imported raw materials. The sharp fall in the value of the pound following last year’s Brexit vote has made imported goods more expensive.
Tim Moore, senior economist at IHS Markit, said:
“All three main areas of construction activity have started to recover from last summer’s soft patch, but in each case, growth remains much weaker than the cyclical peaks seen in 2014. Housebuilding remains a key engine of growth for the construction sector, with the latest upturn the fastest for almost one year.”
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