Broadly positive construction data

6 April 2023

The author and wit Mark Twain once observed that facts are stubborn things but statistics are pliable, and the blog has often said that economic data should perhaps be seen as an indicator of trends rather than specifics. 

Data for March in the Purchasing Managers’ Index (PMI) produced by S&P Global and the Chartered Institute of Procurement & Supply (CIPS) show a varied picture of the construction sector, with broadly positive sentiments. 

The survey reports another rise in UK construction output, helped by a moderate increase in new orders. 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.

Supply conditions improved in March, reflecting greater availability of construction products and materials, alongside fewer logistics bottlenecks, echoing recent sentiments expressed by the Construction Leadership Council, as reported earlier.

At 50.7 in March, the headline seasonally adjusted index figure which measures month-on-month changes in total industry activity – was down from 54.6 in February but above the 50.0 no-change threshold for the second month running.

The survey also signalled an increase in commercial building work (index at 51.1), although the rate of expansion eased from February's nine-month high. Meanwhile, housing activity (index at 44.2) decreased at a sharp and accelerated pace in March. The rate of decline was the fastest since May 2020, with survey respondents often citing fewer tender opportunities due to rising borrowing costs and a subsequent slowdown in new house building projects. 

However, despite subdued housing market conditions, the latest data signalled a further increase in total new work received by construction companies. The latest rise was the second fastest since July 2022. 

Finally, around 46 per cent of the survey panel predict an increase in business activity during the year ahead, while only per cent foresee a reduction. Indeed, the resulting index reading signalled the strongest degree of positive sentiment since February 2022, reflecting signs of a turnaround in client spending and a more favourable outlook for the wider UK economy. 

● On the topic of statistics, I found an amusing quote attributed to the street artist Banksy: “A recent survey of North American males found 42 per cent were overweight, 34 per cent were critically obese – and 8 per cent ate the survey.”