September 2016 UK Construction PMI Smashes expectations

The UK’s construction sector is firmly back in growth following the mid-year slump in activity.

Data from IHS Markit and the CIPS have shown the UK’s construction sector returned to growth in September following months of decline in activity.

The Construction PMI read at 52.3, well ahead of the 49 figure forecast by economists echoing the strong beat delivered 24 hours earlier by the Manufacturing PMI release.

September’s was the fastest increase in new orders for six months and this is the first time activity has risen since May:

Markit and the CIPS report that the growth was driven largely by an uptick in residential building.

Survey respondents cited improving confidence among clients and a reduced drag on demand from Brexit-related uncertainty.

Furthermore, construction firms indicated a further recovery in their business expectations for the next 12 months, with optimism the strongest since May.

“The residential sector was the winner this month, as consumer confidence made a modest recovery, post the EU referendum,” says David Noble, Group CEO at the CIPS.

“Supplier delivery times recovered at a moderate rate, as higher stocks of building materials were reported and business optimism improved, ending a 39-month low,” says Noble.

However, there are concerns that the weaker Pound Sterling will push the cost of inputs that are imported.

Further, concerns were expressed over the lingering uncertainty of the Brexit process and how it will impact future business.