The UK's construction sector smashed expectations last month

 
Emma Haslett
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London Housing Stock
Growth in the sector was driven by housebuilding. (Source: Getty)

The UK's construction sector smashed expectations in November, a closely-watched index has shown, suggesting the sector was back to growth in the final quarter of this year.

IHS Markit's purchasing managers' index (PMI) for the construction sector rose to 53 in November, data published today showed, well above both the 50 level below which suggests contraction in the sector, and last month's reading of 50.8. Analysts had expected a much lower reading of 51.

Business activity rose at the strongest rate since June, IHS Markit said, while new orders and employment numbers also increased by their most in five months.

However, it also cautioned that housebuilding was the main driver of growth, while commercial building and civil engineering both contracted.

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“Construction firms reported that heightened economic and political uncertainty continued to hold back commercial development activity," said Tim Moore, associate director at IHR Markit.

"The latest drop in civil engineering was linked to a recent lack of tender opportunities for infrastructure-related projects. Business optimism across the construction sector remained relatively subdued, but picked up from the near five-year low seen in October."

"Looking ahead, continued support from relatively low mortgage rates, the Help to Buy Scheme and other housing policy initiatives should ensure that housing maintains momentum," added Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"Meanwhile, signs that the Brexit divorce terms will be agreed imminently, enabling future relationship talks to begin, might help corporate confidence to recover. But with the UK government insisting - for now - that Britain eventually will leave the EU’s single market and customs union, firms likely will remain reluctant to commit to construction projects with long time horizons. We expect the construction sector to bump along the bottom as long as a hard Brexit still is one of the options on the table."

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