Two reports reveal strong growth in construction activity

There was marked increase in construction activity in October according to the latest report from the Chartered Institute of Purchasing and Supply (CIPS).

Total constructions activity jumped from 53.6 in September to 58.1 in October, based on the Purchasing Managers Index. This is the highest reading since March 2004.

The CIPS said the increase followed an upsurge in new order book expansion.

Volumes of new orders received by construction companies rose from 54.1 to 57.3 while the growth of employment also picked up climbing from 55.2 in September to 55.9 in October.

Finally, average lead times continued to lengthen according the Suppliers Delivery Times Index which produced a reading of 45.9. The CIPS believes this was due to increased purchasing activity and shortages of some construction materials.

Roy Ayliffe, director of professional practice at the CIPS, said: “Purchasing managers saw an impressive acceleration in UK construction activity in October. Not only was growth at its sharpest since March 2004, but expansion was widespread throughout the sector. Consequently, purchasing managers also reported a sharp increase in employment.

“The extent of growth in the construction sector was, however, tempered by signs of capacity constraints, with further deterioration in the quality of sub-contractor work and lengthening of supplier delivery times.”

Meanwhile, the Department of Trade and Industry has reported that construction orders for the third quarter are up 4% compared with the same period last year.

Orders for the 12 months to September 2006 also rose 8% compared with the previous 12 months, according to the figures. However, orders for third quarter fell by 10% compared with the previous quarter, with decreases in all sectors except public housing and public non-housing orders.

Orders were boosted by private commercial work, with orders in the sector rising 39% compared with the previous 12 months. Private industrial orders rose 16% compared with the previous year; however private housing orders fell by 5% over the same period.