Builders Confidence Rises Even As Recovery Slows
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Builders Confidence Rises Even As Recovery Slows

posted in News by Skippy on 12:14 Jun 15th, 2015

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For construction companies in the UK, the way they measure the success of their business activity and the strength of the building sector in general is through a system call the Construction Purchasing Managers' Index, which provides a score based on various parameters which help indicate how well things are going in the industry.

Confidence Remains High In The Construction Industry

The Index posted a score of 57.8 in March, which is down from 60.1 in February, but still well above the 50.0 no-change value, which indicates whether the sector is in growth or decline. In the survey which is conducted the create the score, construction firms reported being positive towards the outlook for business activity over the next 12 months, with the latest reading the highest since February 2006.

However one external factor which caused uncertainty within the industry was the fate of this year’s general election, which resulted in a conservative majority – something which generally went down well with most companies.

The uncertainty beforehand resulted in many decisions and spending being delayed until after the election, which caused the sector to take a momentary pause. It has also been suggested that stock shortages at suppliers and robust demand for construction materials had led to increased input prices.

Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI®, said: “UK construction output growth has settled in at a strong pace so far in 2015, although the recovery has lost some of its swagger since last year. "All three main categories of construction activity saw a growth slowdown in March, in part reflecting softer new business gains as some clients delayed spending decisions ahead of the general election.”

“However, UK construction companies are highly upbeat about their prospects for growth over the course of the next 12 months, helped by improving economic fundamentals, strong order books and a healthy pool of new invitations to tender.”

Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “The construction sector's strong recovery took on a gentler, quieter pace, with the housing sector continuing to lead the way ahead - but only just, and with the commercial sector a close second.”

“The main takeaway from this month must be the highest levels of confidence seen in the construction sector for almost a decade. Though there may be some low-level obstacles still to come, the sector gets the green light as there is evidently belief that the future for the construction sector is a sustainable one.”

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