According to the report from the S&P Global/CIPS, activity in the UK construction sector continued to expand in March, but at a slower pace than in February.
UK construction PMI fell to 50.7 points from 54.6 points in February. Economists had expected a decline to only 53.5 points. Despite the sharp drop, the index remains above the 50-point mark for the second month in a row, which indicates an expansion of activity in the sector.
The report showed that the civil engineering category saw the fastest rise in business activity, while house building was the weakest-performing area. Lower volumes of residential building work have now been recorded for four months in a row. Despite the unfavorable conditions in the housing market, the latest data indicated a further increase in new orders among construction companies, with the latest increase being the second fastest since July 2022. Meanwhile, the pace of job creation accelerated to the highest level since October 2022. However, some construction firms noted that increased wage pressures and a shortage of available candidates served as an obstacle to hiring. Purchasing activity as a whole did not change in March. Some construction companies have suggested that improved supply conditions have prompted them to reduce inventories. Raw material prices continued to rise sharply in March, with construction companies often noting that suppliers attributed this to higher energy prices and higher staff salaries. However, the latest round of cost inflation was the second-slowest since November 2020. As for the prospects, about 46% of respondents predict an increase in business activity in the coming year, and only 11% predict a decline. The final value of the index signaled the strongest degree of positive sentiment since February 2022.