The Markit/CIPS UK Construction Purchasing Managers Index (PMI) rose up to 52.6 in October, an increase from 52.3 in September.
Housing activity remained the key growth driver across the sector in October, with a rise in residential building work and the stabilisation in commercial construction activity. However, civil engineering fell slightly while the pace of residential work was slightly weaker than September.
In addition, new business growth was only moderate and still much weaker than experienced during the first quarter of this year.
Respondents suggested Brexit-related uncertainty continued to impact on client confidence, resulting in delayed spending decisions. However, companies reported a rise in staffing levels as well as purchasing activity, with a number of firms (43%) anticipating a rise in business activity over the next 12 months.
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Tim Moore, Senior Economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: "While business activity has picked up since the third quarter, the recent phase of new order growth has been the weakest for three-and-a-half years. Survey respondents noted that Brexit-related uncertainty and concerns about the UK economic outlook had held back investment spending."
"Subdued new order intakes contributed to a fall in construction sector business confidence for the first time since July. At the same time, a sharp pace of input price inflation added to construction firms' anxieties about the year-ahead business outlook, with higher costs overwhelmingly linked to supplier price hikes in response to the weak pound."
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, added: "Housing proved to be the most resilient driving force behind the continued moderate expansion of activity – the fastest since March, but, the level of new order growth was at a weaker level than seen earlier in the year.
"Respondents reported a squeeze on margins, while increased marketing and new projects helped counteract the continuing uncertainty surrounding the Brexit aftermath. Coupled with concerns around the longer-term performance of the UK economy, this dampened overall business optimism to its second-lowest level since May 2013."
(LM)
