Homebuilding Activity Fuels UK Construction Sector’s Growth in May

House buildingA resurging homebuilding activity in the U.K. has helped the overall construction business to grow to a 17-month high in May.

The growth rate indicates that new housing supply remained unaffected by a slowdown in property values, according to Tim Moore, IHS Markit senior economist. Based on the Markit/CIPS construction purchasing managers’ index, construction activity expanded since it rose to 56 from 53.1, the highest figure since December 2015. A number above 50 indicates growth.

Housing Boom

A srebound in home construction in May led builders to hire more labourers and acquire more supplies for work such as metal spinning in Birmingham, London and other cities, as they received an influx of new projects.

Moore said that the strong job market, steady demand and low mortgage rates served as factors for the rebound in residential property projects, as well as those in civil engineering and commercial construction. The industry hit a slump at the start of 2017, yet the growth appears to be a sign of recovery.

The surge in construction occurred despite a continually weak sterling, as construction companies’ input prices increased at the slowest pace in seven months.

Fading Impact

The construction activity for May also signalled that the impact of Brexit has begun to disappear, according to Samuel Tombs, an economist at Pantheon Macroeconomics. However, negotiations for Brexit will start soon, and the outcome presents uncertainty whether the growth in construction will be brief.

Chancellor Philip Hammond said that the country’s economy is headed for a stable future, as gross domestic product rose 0.2 per cent in the first quarter of 2017, according to data from the Office for National Statistics.


The construction industry’s performance serves as one economic indicator for the country since an increase in building activity provides a positive domino effect on other industries and the labour market.