Construction sector bouncing back?

18/12/2018
By: LSL Land & New Homes

Construction sector bouncing back?

Recent ONS (Office for National Statistics) analysis suggest that the UK construction sector expanded by 2.1% in Q3 when compared with Q2. Given that in Q2 there was also growth, this indicates sustained rebound following a contraction of 1.6% in Q1. In part this has been due the way in which public housing builds are reported combined with maintenance projects.

Private housing output increased by 5.7% in Q3 when compared against Q2 and was also 9.6% higher than Q3 in 2017. The infrastructure and maintenance sectors also saw increases in output.

Other construction activity data sources suggest that the value of contracts awarded in October 2018 was 3.8% lower than September. Annually, the number of contracts awarded in October decreased by 23.5% when compared against October 2017. However, in the three months to October 2018, the number of contract awards increased by 23.3%.

The IHS Markit / CIPS UK Construction Total Activity Index has reported four-month high as at November 2018.

Analysis from LSL Land & New Homes' New Build Market review with data to the end of May 2018 suggests a short-term dampening of new build sales, probably due to Brexit related effects. This is likely to have impeded output by reducing throughput.

Overall, there is reasonable cause for cautious optimism even if output is subdued in the short to medium.

New build transaction volumes to May 2018

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