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Optimism for construction sector

07 February 2022

Ian Cooper, Director and Head of Construction sector at DWF, comments on the IHS Markit / CIPS UK Construction PMI for January 2022. He said:

"Some good news for the construction sector. Despite the challenges of COVID, material shortages / price increases, labour shortages and haulage issues, the industry in January recorded its 12th consecutive monthly increase in activity.

"Leading the way appears to be significant optimism in the commercial sector supported by growth in the civil engineering industry, albeit the latter may soon see the consequence of the Government pausing new motorway schemes whilst it reviews the safety of smart motorways.

"Surprisingly housing reported the slowest growth, this despite a significant shortage of properties available for sale. One significant factor could be the Governments demand from house builders for a share of their profits to fund cladding remedial works. Whilst the reception from house builders has been a cold one, uncertainty does not help confidence.

"As a relief, and despite ongoing increases in energy costs, the rampant increase in the price of materials appears to be abating with the rate of inflation at its lowest for 10 months in January. Other positive signs are an increased number of new project starts and additional staff hiring.

"Unsurprisingly this has reflected in industry optimism being at its highest level since May 2021. As we start 2022, in hopefully a post-COVID world, this is great news for construction, representing a solid platform for growth. A hope would be that a recognition is observed that the opportunities for work are there, competition is reduced and so the need for sub-optimal commercial proposals are not required. Thus allowing the industry time and margins for investment in much needed increased productivity and innovation.

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