Business confidence highest for over a decade
Construction business confidence has reached its highest level in 11 years, according to Markit/CIPS UK’s latest Construction Purchasing Managers’ Index (PMI).
Construction firms reported a strong degree of positive sentiment towards the outlook for business activity over the next 12 months.
Just under two-thirds of the survey panel (62%) forecasted a rise in output, while only 4% expect a decline.
As a result, the latest survey pointed to the strongest degree of business optimism across the UK construction sector since February 2004.
Output also grew at its fastest rate in four months as the seasonally adjusted output index posted a score of 58.1 in June, up from 55.8 in May, representing the quickest increase since February. The 50.0 mark separates expansion from contraction.
The PMI report also found job creation was at its highest rate in 2015, with the latest increase in employment numbers was the fastest since December 2014.
Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “The extent of the recent rise in construction optimism is partly down to relief that pre-election uncertainty has now passed, but it also suggests that firms are infused with confidence that underlying demand will continue to recover.”
Stefan Friedhoff, Global Corporates managing director for construction at Lloyds Bank Commercial Banking, said: “There is confidence in the market, particularly given the business environment has become more stable over the past two months.
“Despite this and record order books, however, ongoing price sensitivity continues to put margins under huge pressure. Unfortunately, the causes of this – a shortage of suppliers and labour, project delays and demanding clients, among other things – are long-term industry issues likely to ensure slim margins remain for the foreseeable future.”