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Construction sector records growth and cautious optimism for year ahead

12 January 2021

Having recorded growth in both November and December 2020, the construction sector remains broadly optimistic for the next 12 months, according to the latest analysis of the market.

Results from the IHS Markit/CPS UK Construction Total Activity Index showed activity levels of 54.7 and 54.6 in November and December, well above the 50.0 threshold required to indicate growth.

This period included the previous lockdown in England and the recording of positive results has led an increase in optimism in the sector.

Further supported by an increase in new orders, confidence is at its highest level since April 2017, according to the Infrastructure Intelligence analysis of the study.

The construction sector has fared better than others in coping with the impact of the Coronavirus pandemic, assisted by being allowed to continue to work on building sites.

Although housebuilding was the main driver of the expansion, commercial activity also showed modest growth, with civil engineering returning the lowest activity level.

Rising prices for timber, steel and other products was recorded, but this did not detract from the expectations of further growth in business levels in 2021.

Industry opinion shows that the boost in confidence has come from "stronger underlying demand", with increased infrastructure spend and a potential rise in commercial work expected in future months in response to lower levels seen in 2020 attributed to the pandemic.

Most commentators accepted that the industry faced further difficulties this year, particularly with the ongoing UK lockdowns in effect, but its performance during 2020 was seen as supporting a positive outlook for the year ahead.

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