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In August, the UK construction sector's recovery continued, according to a recent survey, though the pace of growth moderated. The S&P Global UK construction purchasing managers' index (PMI) registered at 53.6, falling short of the anticipated 54.9 but remaining comfortably above the neutral threshold of 50.0. A reading below 50.0 indicates a contraction, whereas a figure above it signifies expansion.
The July PMI had reached 55.3, marking a 26-month peak. Despite the slight dip in August, the S&P Global report highlighted a sustained rebound in overall business activity, buoyed by strong new order growth and an improving economic environment.
Within the sector, the residential construction index advanced to 52.7, the highest level observed since September 2022. This increase was driven by reduced borrowing costs and more favorable market conditions. The commercial construction sector emerged as the strongest performer, with an index reading of 53.7. However, the growth rate in this sector slowed to its lowest point since March. The civil engineering sector saw its index at 51.8.
Despite the overall growth rate easing, respondents exhibited a positive outlook for the future. Approximately half of the survey participants anticipated an increase in output over the next year, while only a small fraction predicted a decrease.
Tim Moore, the economics director at S&P Global Market Intelligence, noted that the UK construction sector appears to have made a significant recovery following a challenging start to 2024. Notably, the house building segment has demonstrated renewed energy. Moore also pointed out that improving sales pipelines and a shift in demand conditions have fostered a robust sense of optimism within the sector. However, some companies have expressed concerns regarding a deceleration in civil engineering activity and uncertainties surrounding infrastructure projects, which could pose challenges to growth expectations.
The survey data was collected from August 12 to August 29, involving responses from a panel of approximately 150 construction firms.
