UK construction grew at the fastest pace in eight months in February, led by stronger housing activity, defying expectations for a slowing, survey data from IHS Markit showed Friday.
The CIPS/Markit purchasing managers’ index, or PMI, for the construction sector rose to 59.1 in February from 56.3 in January. Economists had forecast a lower score of 54.3.
A reading above 50 suggests growth in the sector. The reading has now remained above the threshold for 13 months.
Overall construction growth was underpinned by stronger client confidence and work on new projects commencing.
House building emerged as the best performing category, replacing commercial work, with the strongest growth in eight months.
Commercial construction grew at the sharpest rate since last July. Civil engineering activity grew at the fastest pace since June 2021.
New order growth extended the current sequence of expansion to 21 months and the rate of growth was the fastest since last August, on stronger client demand in line with the recovery in economic activity and new projects.
Input buying and hiring increased at faster rates in February. Meanwhile, driver and material shortages as well as international shipping issues led to delays.
Consequently, input prices rose further at a sharp rate, albeit the weakest in 11 months, mainly due to rising raw material and commodity prices amid supply shortages and a lack of transport capacity.
The near-term outlook for construction activity remained positive in February, but the overall degree of optimism eased to the softest since January 2021 as firms cited concerns about the impact of rising costs and supply shortages.
“The highest rise in order books for six months didn’t do enough to improve future optimism as business expectations dropped to January 2021 levels,” Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said.
“Curbing inflation will continue to be a big issue for building firms who will be nervous about securing continuing supply and offsetting price rises to improve business margins, especially if costs continue their skyward trajectory.”
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