Construction, News, RFM Viewpoint

RFM Viewpoint: Delving into the Construction Industry November 2020

Property Expertise and Analysis

Each month RFM Group’s team of property experts explore and explain what is driving the UK property market, providing insider insights and industry knowledge.

After a bounce in September, the construction industry is once again slowing down according to data released by IHS Markit.  Whilst many companies reported a sustained recovery in output volumes, the rate of expansion was at its slowest for five months.

This is evidenced by a fall in the headline IHS Markit/CIPS UK Construction Total Activity Index to 53.1, from 56.8 in September.

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Housebuilding Remains Strong

Housebuilding remains the strongest sector in October with the speed of recovery easing only slightly compared to the month prior.  Continued demand and favourable buying conditions are cited as key reasons for the boost.

Weak Commercial Growth

Whilst commercial activity continues to rise with the activity index sitting at 62.4, the rate of expansion is notably weak.  In civil engineering the index is at 36.4; activity has dropped for the third month running with the rate of decline the fastest it has been since May.

October sees a boost in new work orders

On a more positive note, October data is pointing to a significant boost in new work orders received by construction companies.  This is mostly attributed to the start-up of projects that had been delayed as a result of the health crisis as well as continued demand for residential housing.  This rebound in construction activity is continuing to put pressure on supply chain capacity with extended lead times for construction materials and products.

Meanwhile, efforts to reduce overheads and ongoing economic uncertainty contributed to a further decline in staffing numbers across the construction sector.  The rate of job shedding was nonetheless much slower than seen in the second quarter of 2020.

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