Construction sees first growth in six months

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UK construction companies reported a bounce back from the six months of decline which indicated a renewed increase in total industry activity during March.

Although the report showed that orders expanded at the fastest pace since May 2023 but construction companies remained cautious about staff hiring, with employment numbers falling for the third month running in March echoing what has been hearing within the trades.

Larger projects and civil engineering lead the way in March, as output levels increased at a marginal pace. Panel members cited increased work on infrastructure projects and resilient demand in the energy sector.

House building and commercial construction reported largely flat since November 2023 but residential work on domestic properties has shown slight growth which shows green shoots in this sector.

Buyer report showing sectors of growth
Buyers report showing sectors of growth

Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey 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.”

Source>The S&P Global UK Construction Purchasing Managers’ Index