Construction activity slipped in December, although it did beat market expectations, shows fresh data.

The IHS Markit/CIPS UK Construction PMI for December came to 54.3 compared to 55.5 in November. The market expected a reading of 54, however.

While commercial building growth fell to its lowest since September, residential construction came out swinging, being the only category to rise at the end of this year.

Meanwhile, new order inflows grew at the fastest pace since August while job creation “eased only slightly since November, while supplier lead times lengthened to the least marked extent since November 2020.”

Naismiths director Gareth Belsham says that this latest data “is mostly rosy”.

He adds: “Even with the disruption caused by the Omicron variant, business sentiment remains strong – with half of construction firms predicting further increases in demand during 2022 – and inflationary pressure is easing.

“Several of the supply bottlenecks that emerged during the boom months of 2021 – in which the demand for materials far outstripped supply – are finally beginning to clear as manufacturers step up production.

“While transport niggles mean the wait times for key materials are still long, they are no longer getting any worse. In other ways too, December saw a return to form for construction – with housebuilding reclaiming its crown as the best-performing subsector of the industry.

“After a rollercoaster year for construction, the supply chain has once again earned its stripes – responding to soaring demand with an improved supply of both materials and labour that’s enabling contractors to power through the work that continues to come in.

“The industry begins 2022 with a spring in its step and solid order books, with December seeing the number of new orders recovering to its best level since August.”

And Beard finance director Fraser Johns comments: “While growth slowed in December, the overall picture is a positive one. Supplier delays are easing slightly, price inflation is reducing and starting to find its new level, and customer demand has remained resilient.

“We are clearly still not quite out of the woods, with Covid cases rising and remaining uncertainty surrounding this latest variant.  Construction firms will need to ensure their safety measures are up to scratch.

“While there are certainly challenges, the new year will present opportunities. Customer demand hasn’t been hampered too much by the new variant, and in fact the latest rise in overall new order volumes was the largest since August.”