The UK construction sector experienced its most significant growth in over a year, according to the latest purchasing managers’ survey.
- Civil engineering and commercial construction offset the slowdown in house-building, driving the highest rate of expansion since February 2023.
- Commercial building saw its first increase in activity since August 2023, spurred by an upsurge in refurbishment projects.
- Despite increased workloads, the construction sector faces pressure from sustained cost inflation and reduced employment numbers.
- Industry optimism rises for the upcoming year, with many firms hoping for a favourable economic climate and potential interest rate cuts.
The UK construction industry has demonstrated remarkable resilience, achieving its fastest growth in more than a year based on the latest purchasing managers’ survey. This positive momentum is largely driven by significant advancements in civil engineering and commercial construction, which have effectively compensated for a persistent decline in house-building. In April, the headline S&P Global UK Construction PMI rose to 53.0 from 50.2, marking the second consecutive month of growth and the most robust expansion since early 2023.
The commercial building sector, in particular, has reversed its downward trend, with activity levels registering an index of 53.9. This positive shift, the first since August 2023, is attributed to rising workloads and a renewed demand for refurbishment projects. Civil engineering has mirrored this upward trajectory, achieving its highest rate of growth in nine months with an index of 53.6. Meanwhile, the residential construction sector remains challenged, with house-building index scoring at 47.6, indicative of negative growth due to subdued market conditions and the adverse impact of mortgage interest rates.
New business volumes in the construction sector continued to expand for a third month in April, though the pace has slightly decelerated since March, remaining modest overall. Higher order intakes have been linked to improved client confidence, especially within the commercial segment. However, despite the increasing output and new orders, employment levels have experienced a minor decline. This reduction is attributed to cost pressures and the non-replacement of voluntary leavers after major project completions.
The demand for construction materials and products has weakened consistently for the eighth month in a row, partly due to destocking activities. However, the supplier performance has notably improved at a pace not seen since December 2023. This, coupled with modest rises in purchasing prices, suggests a stabilised balance between supply and demand, which has moderated overall input cost inflation.
Looking forward, there is an optimistic sentiment within the industry about future business activity, with nearly half of those surveyed anticipating an increase in output over the next 12 months, buoyed by positive sales signals and potential interest rate reductions. This outlook, however, is tempered by existing economic uncertainties and elevated interest rates affecting private development sectors.
The UK construction sector’s recent growth highlights both its resilience amid challenges and the optimistic outlook for future activity.
