UK building firms start hiring again as lockdowns fail to dent rebound

Tom Belger
·Finance and policy reporter
·2-min read
A construction worker wearing a protection face mask in Westminster, London as the UK continues in lockdown to help curb the spread of the coronavirus.
Construction continued to operate and expand in December. Photo: PA.

Building firms continued to rebound in December in spite of rising coronavirus rates and restrictions across the UK, according to a leading business survey.

A majority of construction companies reported bulging order books last month, with work allowed to continue by government despite tightening COVID-19 curbs on the wider economy.

A bellwether poll of firms in the sector showed employment rising in the sector month-to-month for the first time in 21 months, as firms sought to meet demand for new and previously delayed projects.

Firms were more optimistic about likely growth over the year ahead than at any time since April 2017, and the rate of expansion in trade came only a whisker short of the six-year high seen in November.

The latest figures are from a closely watched purchasing managers’ index (PMI), which turns survey responses into headline readings on trade levels.

The reading for construction came in at 54.6, little-changed from last month on an index where figures above 50 show most firms growing and below 50 show decline.

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“Some positive news for the construction sector in December as the uplift from summer’s close continued through to the end of 2020 and new order levels increased for the seventh successive month,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.

Experts said the strong growth was fuelled mostly by a sharp rebound in housebuilding. The property sector has boomed since restrictions were eased after the first nationwide lockdown last year, despite the struggles of the wider economy.

COVID-19 and lockdowns sparked surging demand for home moves, further encouraged by stamp duty and land tax cuts. The property sector has been largely exempt from subsequent COVID-19 shutdowns.

"Once again residential building was the strongest sector and construction companies focussed on this segment seem resilient for now,” added Brock.

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It marks a striking contrast to the fortunes of many building firms’ in other large European countries. Similar PMI data for leading eurozone economies on Thursday showed continued decline in trade, with a reading of 45.5 in December. French construction work slid at the fastest pace since May.

But UK firms continued to struggle with supply chain problems, with ports chaos and strong demand for supplies pushing up their costs at the fastest rate since April 2019.

“With purchasing growth close to its highest for six years, supply chains were groaning at the seams and delivery times increased to the most dramatic extent for six months,” said Brock.

“Low availability for finished products and raw materials as a result of port disruptions added to builders’ woes as suppliers named their price for goods in acutely short supply.”

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