Sharp rebound for construction
UK construction companies experienced a sharp rebound in business activity during May, helped by the fastest upturn in residential work since the end of 2015, according to IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI).
The latest survey also revealed a sustained recovery in new work, following the soft patch seen during the first quarter of 2017. Increased workloads encouraged greater staff recruitment and a marked expansion of input buying across the construction sector.
Meanwhile, prices for imported materials continued to push up input costs during May. However, the overall rate of input price inflation eased further from the peak seen at the start of the year.
The seasonally adjusted PMI posted 56.0 in May, up sharply from 53.1 in April, to signal the strongest expansion of overall business activity for 17 months. While the headline index signalled robust growth momentum during May, the latest reading was still much weaker than the post-crisis peak seen in January 2014 (64.6).
A sharp and accelerated rise in residential work was a key factor supporting overall construction activity in May. The housing sub-category has rebounded strongly following the seven-month low seen in March. Moreover, the latest increase in residential building was the fastest since December 2015. Survey respondents cited a strong pipeline of new development projects and resilient underlying demand conditions.
Tim Moore, senior economist at IHS Markit, said: “A sustained rebound in residential building provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply. Instead, strong labour market conditions, resilient demand, and ultra-low mortgage rates appear to have helped boost work on residential development projects in May.”