Last month saw construction growth reach the weakest rate seen since August while costs increased significantly
The latest Markit/CIPS construction purchasing managers’ index (PMI) has revealed construction growth hit a five-month low of 52.2 in January. This followed a nine-month high in December of 54.2.
Costs have been steadily rising but last month showed the sharpest increase since August 2008. This is due to the slump of the pound in the wake of the Brexit vote, which has pushed up the price of imported materials.
However, despite these factors the sector remains upbeat about the year ahead. Markit economist Tim Moore said: “There were more positive trends in terms of staff hiring and business optimism regarding the year-ahead outlook.”
Moore added that workloads were reportedly seeing growth since the referendum due to Britain’s resilient economic growth and a strong pipeline of projects.
Growth is certainly expected, with a survey released earlier this week by the Royal Institutions of Chartered Surveyors noting that road and rail projects will push the sector over the next 12 months.
Chancellor Philip Hammond has set aside some £23bn to spend on boosting economic productivity over the next five years, with a promise to spend more on transport infrastructure. Major projects such road upgrades and delivering HS2 should provide opportunities for the construction sector to grow further.
The RICS survey also drew attention to the ever present skills shortage, particularly its impact in the Midlands where notable shortages are being felt. In fact, the data showed 75 per cent of respondents to the survey said shortages of skilled workers remained an issue for them. These shortages within the construction sector are holding projects back.