More signs of confidence
7 March 2024
Expressions of optimism from hirers featured recently on the blog, and earlier suggestions that a business should trust its own experiences and judgement rather than the abstract views of economists, appear to have been vindicated by data from the respected S&P Global UK Construction PMI index.
February data pointed to improved demand conditions across the UK construction sector. Although only marginal, the rate of new business growth was the fastest since May 2023.
Business optimism improved for the third time in the past four months and was the highest since January 2022. Construction companies often cited hopes of a sustained upturn in customer demand as well as more favourable economic and financial conditions over the course of 2024.
At 49.7 in February, up from 48.8 in January, the headline index registered its highest level since August 2023 and was only fractionally below the neutral 50.0 threshold.
All three main categories of construction activity saw a near-stabilisation of business activity in February. House building saw the biggest turnaround since January, with the respective index at 49.8, up from 44.2 and the highest level. Survey respondents suggested that improving market conditions had gradually contributed to a stabilisation of residential construction work.
In contrast, the commercial segment saw a more subdued performance than in January, with construction companies typically citing hesitancy among clients and constrained budget setting.
Total new work increased marginally in February, thereby ending a six-month period of decline. This appeared to reflect a turnaround in tender opportunities and greater client confidence, especially in the house building segment.
More than half of the survey panel (51%) anticipate a rise in business activity over the year ahead, while only 6% forecast a reduction. This pointed to the strongest degree of business optimism for just over two years in February. Construction companies mostly noted new project starts and positive signals for customer demand, partly linked to expected interest rate cuts.
So with data like this, the proverbial glass would appear to be half-empty rather than otherwise.
Photo: Matt Seymour/Unsplash
