UK construction growth slows in October

According to the report from IHS Markit/CIPS, UK construction companies reported a sustained recovery in output volumes during October, but the rate of expansion was the slowest for five months. This was signalled by a fall in the headline seasonally adjusted UK Construction Total Activity Index to 53.1, from 56.8 in September. The index has registered above the 50.0 no-change mark in each month since June.

House building was by far the best-performing area of construction activity in October (index at 62.4) and the speed of recovery eased only slightly since September. Survey respondents often commented on pent up demand and a boost from improving housing market conditions in recent months.

Higher levels of overall construction work also reflected another rise in commercial activity (index at 52.1), although the latest expansion was the weakest for five months. Meanwhile, civil engineering activity (index at 36.4) dropped for the third month running and the rate of decline accelerated to its fastest since May.

October data indicated a robust increase in new work received by construction companies. The latest improvement in new order books was the strongest since December 2015.

Looking ahead, construction companies reported optimism towards their prospects for the next 12 months, despite concerns about the wider economic outlook. Around 45% of the survey panel anticipate a rise in output during the year ahead, while only 14% forecast a reduction.