Data released by S&P Global/CIPS showed that business activity in the UK construction sector unexpectedly expanded in February, for the first time in three months, while the growth rate of activity reached the highest level since May 2022.
UK construction PMI rose in February to 54.6 points from 48.4 points in January. The index rose above 50 points, indicating an expansion of activity in the sector, for the first time since November 2022. Experts expected the index to increase only to 49.1 points.
According to the report, commercial construction was the best-performing area in February (index at 55.3), with the rate of expansion the steepest for nine months. Civil engineering activity also returned to growth (index at 52.3), although the rate of expansion was only modest. Construction companies noted a fall in residential building work for the third consecutive month (index at 47.4). The speed of the downturn eased since January, however. Meanwhile, the volume of new orders increased in February for the first time since November 2022. Construction companies reported signs of an increase in demand for commercial projects due to an improvement in short-term economic prospects. The upcoming launch of projects contributed to a moderate increase in consumer activity in February. At the same time, delays with vendor delivery times were the least widespread for just over three years. A better supply-demand ratio also helped to reduce input price inflation (the rate of price growth in February was the weakest since November 2020). Meanwhile, business expectations for the coming year have improved further. About 46% of survey participants expect an increase in construction activity in the coming year, while only 13% predict a decline. The resulting index indicated the highest level of optimism for the year. Construction firms have often noted signs of recovery in customer demand, despite increased interest rates and recession risks.