After the worst of times, we may now be seeing better times ahead for the construction sector.
As we’ve said, the value of the construction industry is often overlooked, even by the Office of National Statistics.
But, as the Chartered Institute of Building makes clear in a new report, the sector accounts for about 6% of economic output and employs some 2.3 million people.
Its size means that any fluctuation in activity in the sector is an important indicator of the wider economy.
We’d therefore like to welcome the latest IHS Markit/CIPS UK Construction Total Activity Index.
It rose to 55.3 in June from 28.9 the month before. That’s the sharpest monthly rise since June 2018.
The residential sector saw the biggest growth, but with commercial and civil engineering activity also seeing rises.
The Index also measures business expectations for the year ahead. It found that 46% of respondents anticipated a rise in activity.
The message to other sectors is that, despite the gloom, business may rebound faster than expected.
The Index is compiled from purchasing managers in the sector, and any finding below 50 suggests a shrinking market.
The positive figure of 55.3 compares with 39.3 in March at the start of lockdown, and a collapse to 8.2 in April when most construction had ceased.
Those bleak figures were confirmed by the Office for National Statistics that published figures last month. The ONS said that the value of construction activity fell by more than £5.1 billion in April alone.
The consensus is that, now that the sector is adapting to the new normal, month-on-month growth can be achieved.
That does require government to make good on its promises to build hundreds of thousands of new homes and invest in major infrastructure projects.
Last week, we cautiously welcomed the prime minister’s pledge to invest £5 billion in the sector.
“However, we do urge the government to move quickly on that pledge which will not only protect jobs but create new opportunities,” said Jane Embury, director.
“However, what’s also important is that the construction industry is more confident than at any time since the start of the pandemic,” she said.
That optimism was underlined by the Chartered Institute of Procurement & Supply. It said that June saw the fastest rise in purchasing activity in almost five years.
“While there are many challenges ahead, from constrained supply chains to smaller workforces, there are now some signs for cautious optimism,” said Jane Embury.