Construction firms ended 2015 in party mood after a recovery in housebuilding during December.
According to the Markit/Cipcs UK construction purchasing managers’ (PMI) index, housebuilders set aside a difficult year to invest more heavily in new plots after the general election created uncertainty over government policy.
Commercial building in UK cities also held up well to push the December index to 57.8, up from a seven-month low of 55.3 in the previous month, where a figure above 50 indicates an expansion in activity.
George Osborne’s offer of a £12bn boost to infrastructure spending over the next five years gave the outlook for construction a lift, coupled with the government’s determination to encourage an increase in housebuilding on green- and brownfield sites, which has been frustrated in recent years.
Markit said more than half of the survey panel anticipated a rise in business activity over the course of 2016, while only 7% forecast a reduction.
Commercial activity performed well in December and the civil engineering sector, a proxy for the infrastructure sector, struggled – but their fortunes appear to be reversing.
Commercial builders have reached the end of a cycle in London that has pushed land prices to new highs, discouraging further speculative building. The relative decline of regional centres to the benefit of the capital, dampening demand for new office space, has denied them a route out of the south-east.
