Mixed building picture
6 June 2023
Data for May in the Purchasing Managers’ Index (PMI) produced by S&P Global and the Chartered Institute of Procurement & Supply (CIPS) again shows a mixed picture of construction activity.
On the plus side, the survey signalled a modest upturn in overall UK output driven by faster rises in commercial building and civil engineering activity. However, house building remained the weakest-performing category, with output declining at the steepest pace for three years.
The headline seasonally adjusted index registered 51.6 in May, up from 51.1 in April and above the neutral 50.0 mark for the fourth successive month. Although indicative of only modest growth, the latest reading pointed to the strongest upturn in total construction activity since February, say the report authors.
Commercial building (index at 54.2) was the best-performing segment, with construction companies citing a gradual turnaround in confidence among clients and faster decision-making on new projects. Civil engineering also gained momentum (index at 53.9).
But worries about the impact of higher interest rates and subdued market conditions continued to dampen housing activity. Work on residential building projects decreased for the sixth month running and at the steepest pace since May 2020, the survey found.
Aside from the pandemic-related downturn, the latest reading for this category of construction activity (42.7) was the lowest for just over 14 years, says the report.
Overall, however, construction companies remain upbeat about their growth prospects for the year ahead. Around 45 per cent of the survey panel expect an increase in output levels, while only 14 per cent predict a decline.
Nevertheless, the degree of positive sentiment slipped to a four-month low in May. Survey respondents suggested that concerns about the UK economic outlook and the impact of rising interest rates were the main factors holding back growth projections.
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