UK Construction Activity Expands For Third Month

The British construction sector remained in expansion territory for the third straight month in April as rising volumes of commercial and civil engineering work were largely offset by a steep decline in the housing activity, survey results from S&P Global showed Friday.

The Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index, or PMI, rose slightly more-than-expected to 51.1 in April from 50.7 in March. The expected reading was 51.0.

Among the three monitored sectors, commercial building was the fastest-growing area with the rate of expansion the second-strongest since October last year. The improving economic conditions helped to boost clients’ willingness to spend.

Civil engineering activity also grew in April, underpinned by resilient pipelines of work on infrastructure projects.

At the same time, house building activity logged its weakest performance in nearly three years amid constraints on demand from softer market conditions and higher borrowing costs along with delays to new house building projects.

Total new orders received by construction companies rose at a slightly faster pace compared to March, linked to resilient client demand, especially for commercial buildings.

However, employment and purchasing activity increased marginally at the start of the second quarter.

Supply chain improvements continued in April, and lead times shortened to the greatest extent for just over thirteen-and-a-half years.

On the price front, input price inflation eased to the slowest since November 2020, as improved supply and relatively subdued demand helped to alleviate cost pressures.

Despite a continued increase in business activity, construction companies’ confidence dropped to its lowest level in three months.

“The sharp decline in UK house building in April will be a cause for concern, as it becomes clear that the recent interest rate rises will continue to hamper consumer demand for some time to come,” John Glen, chief economist at CIPS, said.

“With a further rate rise expected next week there will be concerns that things will get worse before they get better for UK house builders.”

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