UK residential real estate construction drives PMI index rebound

Real Estate

Work in the UK’s residential real estate industry was the main driver of a recovery in the latest construction purchasing managers index, (PMI). Commercial construction was the weakest sub-sector, yet again.

Work in the UK’s residential real estate industry was the main driver of a recovery in the latest construction purchasing managers index, (PMI), Monday. Commercial construction, however, was the weakest sub-sector, yet again.

Data experts’ IHS Markit’s November construction PMI, rose to a five-month high of 53.1 from 50.8 a month earlier.

Residential real estate maintains momentum

Repeating the trend seen over much of the year, it was activity in the residential real estate industry that posted the strongest performance in November. Survey respondents said that as well as solid demand in the sector, Government policy proved supportive too.

“Residential projects underpinned the rebound in total new order growth to its strongest since June, helped by strong demand fundamentals and a supportive policy backdrop,” said IHS Markit director, Tim Moore.

Still good levels of demand for housing also helped support a modest increase in staff growth, during November. Another bright spot, was a slowdown in the pace of input price growth – the rate at which the cost of goods bought by industry professionals rose - fell to a 14-month low.

Brexit uncertainty curtails optimism, orders

Although it was positive to see still more progress being made in the residential sector, a lack of activity in the commercial and civil engineering industries continued in November. The PMI survey showed activity in both sectors fell.

“It is private sector companies that need to commit to big ticket spending, with commercial development still underperforming as persistent Brexit uncertainty continues to bite,” said Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply (CIPS).

“Concerns over civil engineering in particular are also prevalent with its downward course the longest since 2013 and linked to a shortfall of new tender opportunities,” Brock added.

That uncertainty likely weighed on business sentiment, as optimism for the future remined subdued at a more than four-year low level.