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Construction activity up in April, survey reveals

news

18th May 2017

UK construction companies reported a strong start to 2017’s second quarter, owing partly to an acceleration in civil engineering activity and the building of homes.

Markit/CIPS monthly survey of Construction Purchasing Managers demonstrated that the strongest rise in new work for 2017 so far took place in April. Respondents stated that the resilient economic backdrop was behind continued improvement in client demand.

Continued demand for construction materials and upward pressure on costs from the weakening pound led to a steep increase in input prices yet again. That said, April saw the most significant rise in input buying since November 2016.

The Purchasing Managers' Index (PMI) is a seasonally-adjusted indicator of the economic strength or weakness of the manufacturing sector. The PMI is based on five key factors: new orders, inventory levels, production, supplier deliveries and the employment environment. With a score of 53.1, up from 52.2 in March, the PMI indicated a solid rise in overall construction output.

The most recent reading is still notably below the post-crisis peak seen in January 2014 (a PMI of 64.6). However, the current data points to the sharpest rate of expansion so far this year. The best performing sub-category of construction activity in April was civil engineering, with the rate of expansion the fastest since March 2016. Residential building growth also accelerated, attaining a four-month high.

Five times as many survey respondents (49%) are optimistic about the year ahead, anticipating a rise in construction output when compared to those that forecast a fall (10%). Whilst the overall degree of confidence was down from March, this figure is still well above the low seen following the UK’s decision to leave the EU in July 2016.

Tim Moore, author of the Markit/CIPS Construction PMI, said: “April’s survey reveals a positive start to the second quarter of 2017, with a robust upturn in civil engineering activity helping to boost the construction industry. There were also more encouraging signs from the house-building sector, as growth recovered to its strongest so far this year. However, the performance of the commercial building sector remained subdued in the context of the past four years.”

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