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Construction activity up for November

The November survey of the UK construction economy pointed to a further improvement in the health of the sector.

However, rates of output and new order growth fell further from August’s highs, while input price inflation accelerated sharply.

Construction Purchasing Managers’ Index – a seasonally adjusted index designed to measure the overall performance of the construction economy – posted a reading of 54.3 in November, from 57.4 in the previous month, signalling solid expansion of construction activity.

Construction activity increased in all three sub-sectors covered by the survey, but rates of growth varied markedly, with residential construction activity rising only modestly.

While the volumes of incoming new business to firms in the UK construction sector continued to increase in November, the rate of growth was the slowest for nine months.

The seasonally adjusted Employment Index recorded a reading of 55.9 as UK construction companies recruited additional staff in line with new order growth.

The usage of sub-contractors by UK construction firms rose for the eleventh month in a row in November. Consequently, the availability of sub-contractors continued to fall. The quality of sub-contracted work was deemed to have deteriorated further, although the rate of decline was the weakest for eighteen months. Sub-contractors raised their charges in the latest survey period.

Roy Ayliffe, Director of Professional Practice at the Chartered Institute of Purchasing and Supply (CIPS), said: “While purchasing managers reported another positive month for the UK construction sector, its expansion was the lowest recorded in over a year.

“Also, higher costs for crucial materials, such as oil and glass, also made a negative impact.

“Nonetheless, expectations of improving market conditions prompted the sector to be optimistic about future performance.”