House Builders Benefit from Construction Industry Boom

The largest increase in house building for more than a decade has been recorded by a well-respected industry survey.

The latest figures from the Markit/CIPS UK Construction Purchasing Managers’ Index showed that output rose rapidly during July – the sharpest rise since 2003.

Besides housing, the construction sector as a whole has seen the fastest rate of growth since 2007. Many more jobs have been created as well, with the quickest acceleration in employment the index has ever logged in its 17 year history.

The healthy market has been attributed to an increased demand for construction projects, particularly in the residential sector. The commercial and civil engineering sectors also showed continued growth.

David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “The house building sector is racing ahead this quarter with the fastest growth in construction of homes for over a decade. The industry as a whole continued its impressive growth, dipping slightly from last month’s high.”

Supply shortages are causing problems for construction businesses

Despite the positive statistics, Mr Noble expressed concern about supply shortages – especially construction materials such as bricks.

He added: “One concern is the strain on supply chains that could become a roadblock to sustained growth in the future. Construction firms reported the sharpest deterioration in the quality of subcontracted work since 1999, which combined with lengthening supplier delivery times could conspire to put the brakes on the sector’s growth.

“In the short term at least, the outlook for the coming quarter is strong with the level of new orders continuing to rise and confidence for the year ahead growing steadily since June.”