The UK construction sector returned to growth in March, ending a six-month period of decline, according to S&P Global’s UK construction purchasing managers’ index (PMI).
The index rose from 49.7 in February to 50.2 in March – any reading above 50.0 indicates an overall expansion of construction output – and although the rise in business activity was only fractional, the index stood at its highest level since August 2023.
Survey respondents reported an improvement in sales pipelines and increase in new business enquiries linked to the improving economic outlook, with new orders expanding at the fastest pace since May 2023.
However, construction companies remained cautious about staff hiring, with employment numbers falling for the third month on the trot in March.
Around 49% of the survey panel anticipate a rise in output levels over the next 12 months, while only 11% predict a decline.
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction output returned to growth in March as a renewed expansion of civil engineering work was supported by more stable conditions in the housing and commercial building segments. The marginal overall rise in total construction activity ended a six-month period of contraction.
“The near-term outlook for construction workloads appears increasingly favourable as order books improved again in March and to the greatest extent for just under one year. Construction companies generally commented on a broad- based rebound in tender opportunities, helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024.
“Staff hiring was a weak spot for the construction sector in March amid lingering concerns about margin pressures and continued risk aversion among major clients. Construction firms often reported delays with replacing departing staff, which led to a decrease in total employment numbers for the third month in a row.
“Supply chain pressures eased across the construction sector as subdued purchasing activity helped to alleviate strains on capacity. Improved supply conditions also led to a slowdown in the rate of cost inflation, which slipped to a three-month low in March.”
