Data released by S&P Global / CIPS showed that activity in the construction sector improved in March, moving into expansion territory, and reaching the highest level since August 2023. However, construction companies remained cautious about staff hiring, with employment numbers falling for the third month running in March.
UK construction PMI rose to 50.2 points from 49.7 points in February. Economists had expected an increase to 50.0 points. The index rose above 50 points, indicating an expansion in activity, for the first time since August 2023.
The report showed that among the three main categories of construction activity, civil engineering was the best-performing segment in March. House building and commercial construction activity were both broadly unchanged in March. The stabilization in residential work represented the best performance for this category since November 2022. Meanwhile, new orders in the construction sector rose again in March, with the growth rate reaching a 10-month high. Staff numbers continued to decline last month, but the rate of job shedding was only marginal and eased since February. Purchasing costs rose for the third month running in March. However, the rate of inflation was only marginal and the weakest seen over this period. Construction companies are still optimistic about the prospects for their business activity in the next 12 months. About 49% of respondents expect an increase in production volumes, and only 11% predict a decrease. However, the degree of optimism has decreased since February and reached its lowest level since the beginning of 2024. Political uncertainty, declining profitability and financial pressures were cited as factors reducing optimism.