The UK construction sector expanded at the fastest pace in five months in October despite a fall in new orders, survey data from S&P Global showed on Friday.
The Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index rose to 53.2 in October from 52.3 in September.
Meanwhile, the reading was forecast to fall to 50.5. A reading above 50 indicates expansion in the sector.
Higher levels of business activity were attributed to a combination of new project starts and strong pipelines of unfinished work.
Commercial building was the best-performing category in October, with growth reaching a five-month high. Residential work increased at a slower pace than in September, while civil engineering activity fell for the fourth month in a row.
New orders decreased for the first time since May 2020. The lower demand for new business was due to weaker confidence among clients, alongside headwinds from rising input prices and higher borrowing costs and heightened political uncertainty.
In line with rising output, construction firms raised their input buying and staff numbers in October. However, the rate of job creation has slowed since September.
The supply chain performed well in October, with fewer instances of longer delivery times than in February 2020.
On the price front, input prices rose sharply amid greater energy costs, fuel bills and wages. Nonetheless, the rate of inflation eased to the slowest in twenty months.
Looking ahead, growth expectations for the next twelve months remained very subdued in October, as the degree of optimism fell to its lowest for almost two-and-a-half years. The bleak outlook was linked to recession worries and a drop in UK economic prospects due to rising political uncertainty.
“Construction firms cited concerns about a broad-based decline in client demand due to cutbacks on non-essential spending among clients, although some noted that growth linked to green energy projects, planned infrastructure spending and success in niche markets could help to offset the UK economic headwinds,” said Tim Moore, economics director at S&P Global Market Intelligence, said.
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