Total construction activity grows at fastest rate in 14 months

Construction activity rose at its fastest rate in 14 months during April, according to PMI data.

Business activity in the sector increased for the second month in a row, with civil engineering activity increasing at its fastest rate for nine months, according to the latest S&P Global UK Construction PMI data.

The headline figure of 53.0 in April was up from 50.2 in March, displaying the greatest rate of increase since February 2023.

A figure of 50.0 of the seasonally adjusted index indicates no change in activity.

S&P Global Market Intelligence economics director Tim Moore said: “Demand was boosted by greater confidence regarding the broader UK economic outlook.”

The report largely put the increase down to robust rates of growth in the commercial and civil engineering segments. It comes amid reports of sales being boosted by improving domestic conditions.

Max Jones, director in Lloyds Bank’s infrastructure and construction team, said: “Confidence among contractors is heading in the right direction as inflation moves to more manageable levels for the sector.”

Aecom head of cost management Brian Smith said: “A second month at or above 50 and continued improvement since December demonstrates some resilience to the sector, despite the overall stuttering economy and poor weather.”

Commercial building outperformed the overall market with an index of 53.9 during April.

Survey respondents noted rising workloads and greater customer demand, particularly in refurbishment projects.

Civil engineering activity also saw its strongest pace of increase in nine months, with an index of 53.6.

Supplier lead times were at their shortest level for the year, which supplier respondents attributed to rising material availability.

On the downside, housebuilding did not perform as well, with an index of 47.6, representing the biggest fall in residential buildings work since January. The decline was attributed to the high cost of borrowing and sluggish market conditions.

The business outlook among respondents was positive with almost half anticipating a rise in output over the next 12 months and just 11 per cent predicting a decline.

Overall, commentators pointed to regional investment in social infrastructure projects such as schools, prisons, hospitals and energy project developments as reasons for increasing optimism.

In housing, many respondents commented on improving sales, signs of increasing customer demand and hopes for interest rate cuts as reasons to be confident.

Beard finance director Fraser Johns and RSM UK national head of construction Kelly Boorman pointed to political uncertainty as a potential dampener on demand.

Boorman said: “The unstable environment makes it difficult for businesses to predict their working capital requirements, and subcontractors are carefully considering their commitment to infrastructure projects.”

She added that a general election on the horizon and the endemic skills gap could lead to instability for projects and the risk of overtrading and underdelivering resulting in insolvencies.

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