UK construction firms have moved back into “expansion mode” after a surge in residential building helped the industry back into a growth in activity for the first time since the EU referendum.
The Markit/CIPS Construction PMI data for September stood at 52.3, rising above the index’s 50.0 “no change” mark and marking the biggest increase since March The figure was well above July’s seven-year low of 45.9 but still lower than the long-run survey average of 54.6.
Senior economist at IHS Markit Tim Moore said: “UK construction companies moved back into expansion mode during September, led by a swift recovery in residential building from the three-and-a half-year low in June.”
The residential building market recorded its biggest increase in output since January, with firms citing greater demand and improved market conditions for the upturn.
Civil engineering activity expanded at its fastest rate since March, new work rose for the first time since April and construction employment levels were also up.
The September figures also marked greater contractor confidence, with 45% of those surveyed forecasting a rise in output before the year end, with only 9% anticipating a reduction.
The news comes as the government set out the details of its new £3bn House Building Fund for SMEs. This will help to build more than 25,000 new homes this Parliament and up to 200,000 in the longer term. The fund will provide loans for small and medium enterprise builders, custom builders, offsite construction and essential infrastructure, creating thousands of new jobs in the process.
The fund provides:
- Development Finance Loan funding to meet the development costs of building homes for sale or rent;
- Infrastructure Finance Loan funding for site preparation and the infrastructure needed to enable housing to progress and to prepare land for development.
The fund will also favour homes that are built non-traditionally to incentivise faster delivery.
The government said: “We want to encourage innovation, both in the kind of homes that are built and the way they are delivered. Financing is available to support these projects which could include community led housing projects, serviced plots for custom and self-builders, off-site manufacturing, new entrants to the market and groups of small firms working in consortia to deliver larger sites.”
Loans of £250,000 to £250m are available with smaller loans considered for innovative housing solutions and serviced plots for custom builders.
