Construction growth picks up in April

UK construction companies reported a solid start to the second quarter of 2017, helped by faster rises in civil engineering and residential building activity.

April data also pointed to the strongest upturn in incoming new work so far this year, which survey respondents linked to the resilient economic backdrop and a sustained improvement in client demand. Greater workloads underpinned a further increase in employment numbers and the most marked rise in input buying since November 2016.

Meanwhile, robust demand for construction materials and upward pressure on costs from sterling depreciation resulted in another steep increase in input prices during April.

At 53.1, up from 52.2 in March, the seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) pointed to a solid rise in overall construction output. The latest reading was well below the post-crisis peak seen in January 2014 (64.6), but still signalled the sharpest rate of expansion so far this year.

Civil engineering was the best performing sub-category of construction activity in April, with the rate of expansion the fastest since March 2016. Growth of residential building also accelerated, reaching a four-month high. Commercial building work increased only slightly and at a weaker pace than in March.

Higher volumes of new work encouraged further job creation across the construction sector in April. The rate of employment growth was the strongest since May 2016. Survey respondents indicated additional pressures on the availability of sub-contractors during April, which added to signs of challenges in recruiting skilled labour.

Meanwhile, around five times as many survey respondents (49%) expect a rise in construction output over the year ahead as those that forecast a fall (10%). The degree of confidence was down fractionally since March, but still well above the post-referendum low seen in July 2016.