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UK Construction Sees Increase in Output Volumes

Output volumes for the UK’s construction have been rising steadily, according to statistics from IHS Markit.

The figures, which were released just before the weekend, showed that the rise in overall new orders was the fastest rise since September 2014. However, this was tempered by an increased rate of input cost inflation, now at its highest since April 1997.

Known as the IHS Markit/CIPS UK Construction PMI Total Activity Index, the output volumes were measured at 61.6 in April, which was slightly down from the previous month’s 61.7. Any figure above 50.0 indicates an overall expansion of construction output. The index has posted in growth territory in ten of the past eleven months, with January 2021 the exception.

In a statement, IHS Markit said that the recovery had been led by recoveries in civil engineering activity, commercial work, and house building.

Tim Moore, economics director at IHS Markit, said: “New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects. This added to the spike in workloads from robust housing demand and the delivery of major infrastructure programmes such as HS2.”

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However, Moore sounded a less-optimistic note when talking about the problems the industry was facing. He said: “Shortages of construction materials and much longer wait times for deliveries from suppliers were a sting in the tail for the sector. Aggregates, timber, steel, cement and concrete products were all widely reported as in short supply by survey respondents.”

Of all the sector, commercial work was the best-performing in construction output through April, according to IHS Markit, even if its rate of expansion had eased from the previous month. The numbers for house building also showed something of a decline on the previous month. Civil engineering, however, showed its fastest speed of recovery since September 2014.

Mike Hedges, director at Beard, said that the resurgence was largely due to the notion that the coronavirus pandemic was starting its endgame, at least in the UK. He added: “Throughout the pandemic there has been understandable hesitancy from clients as they wait to see the direction we head in, however with light appearing at the end of the tunnel, clients are now ready to hit the green button.”

However, he said there were key challenges ahead. He added: “Positivity in the sector resulted in the fastest rise in overall new orders since September 2014. However, a key challenge for the industry is material shortages and delays in supply. These current delays are best navigated and planned for in new projects on a collaborative basis, leading to a very positive outlook for the construction sector overall. Client confidence appears to have returned, and as we head into the summer months, sunnier skies appear ahead.”

BY PETE CARVILL

Source: Property Wire

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House completions fall as Persimmon puts quality over quantity

Housebuilder Persimmon saw the number of homes it completed fall by four per cent in the last year, as the company attempts to improve the quality of its building work following a scathing report into its work practices.

Bosses were told that they were focusing too much on building as many houses as possible – but failing to ensure the homes were habitable for the long term.

The fall means full-year revenues hit £3.65 billion in the 12 months to December 31, down 2.4 per cent compared with a year earlier. The average selling price was just £137 more than a year ago, at £215,700, the company added.

Persimmon has sites in the Black Country, Shropshire and Staffordshire, and its West Midlands office at Broadlands, Wolverhampton.

Dave Jenkinson, chief executive, said: “Delivering the maximum benefit to our customers from our quality and service improvement initiatives will continue to be my top priority for 2020.

“I am pleased with the progress we have made in 2019 and there is more to do.

“Action taken to maintain our increased levels of work in progress investment, the increase in quality assurance and customer service resources, and our plans for the implementation of the recommendations of the recent independent review, will all add to our momentum.”

Published in December and led by Stephanie Barwise QC, the report found Persimmon did not properly install fire barriers in homes.

The company was criticised for a series of failures and accused of focusing on achieving a five-star rating from the Home Builders Federation (HBF), rather than building high-quality and safe homes.

Criteria

Persimmon is moving away from focusing on the HBF rating, which is based on customer reviews shortly after the house is completed, and is not “a measure of the true quality and safety of the build”.

Although Mr Jenkinson said: “While our plans for delivering a sustained improvement in quality go far beyond a focus on the criteria of the HBF customer satisfaction survey, our current rating, which is trending strongly ahead of the four star threshold, is tangible evidence of the improvement we are making.”

He added that more details and a fuller response to the independent report and an update on the UK housing market would follow in the next few months.

The company said: “Looking ahead to the 2020 spring season, Persimmon is in a strong market position. The group has a nationwide outlet network and a range of attractive house types available at affordable prices across the UK regions, supported by high quality land holdings and a conservative balance sheet.”

Persimmon also announced non-executive director Claire Thomas, who joined the board in August last year, has decided to quit.

She said: “I have valued being part of the Persimmon board and the experience it presented but it has also made clear to me my preference for working in a large-scale complex global business environment.

“In my time on the board I have seen clear and determined efforts to transform the business and I wish Persimmon the best in their ongoing efforts.”

By James Pugh

Source: Express And Star