Building Finance News:- Increases in new residential developments was the most positive elements in construction activity for  March, according to the Purchasing Manager’s Index.

Hank Zarihs Associates | House Building Rises at Fastest Pace for Three Months, Says PMI

Total activity was 49.7, up fractionally from 49.5 in February, but still below the 50 no-change threshold representing a marginal reduction in overall construction work.

Modest Rise in Confidence Despite Tricky Conditions

March data revealed a small increase in new work received by UK construction companies, although the expansion rate was subdued compared with the long-run survey average.

The data highlighted a modest rise in staffing levels at UK building companies. Input buying rebounded slightly in March, following a decline during the previous survey period.

Business optimism edged up from the four-month low seen during February, but the degree of positivity remained much weaker than the long-term survey average. A number of construction companies noted economic and political uncertainty had weighed on business expectations for the next 12 months.

Respondents also commented on intense competition for new work and a reluctance among clients to commit to major spending decisions in March.

Commercial construction was the worst performing area with business activity dropping to the greatest extent since March 2018. Civil engineering activity also fell in March, although the rate of decline has eased since February.

Building Finance – Building Gets Pricier

Input price inflation was the fastest since November 2018 with higher raw material costs attributed to the weak sterling exchange rate and, in some cases, shortages of items among regular suppliers.

Some firms commented on stock building as part of their Brexit preparations, which helped boost purchasing activity. Suppliers’ delivery times lengthened markedly in March, which survey respondents attributed to low stocks and stretched capacity among vendors.

Joe Hayes, economist at IHS Markit who conduct the survey on for PMI, said Brexit related uncertainty had hit order books.

“UK construction businesses ramped up their purchases of materials and other inputs, reflecting efforts to build safety stocks ahead of any potential Brexit-related disruptions. As such, supply chain constraints persisted and average input lead times lengthened once again.”

However, many experts in the alternative finance sector believe the latest data shows some room for optimism. They add that the current housing shortage and ambitious targets to average building 300,000 new homes a year from 2021 should mean boost house building.

Property development finance brokerage Hank Zarihs Associates chief executive, Shiraz Khan, is upbeat about of new residential developments.

“Lenders still have an appetite for giving building finance and short-term bridging to developers’ with residential developments in areas where there is housing need.”

The latest upturn in housing activity was only modest, but still the strongest seen so far in 2019.

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