UK construction companies experienced a solid return to growth in February after a setback at the start of 2021, according to the latest PMI data compiled by IHS Markit.

New orders also regained momentum as project starts increased in anticipation of improving UK economic conditions over the course of the year.

Extended supplier lead times persisted in February as vendors struggled with transport delays and stronger demand conditions. Stretched global supply chains, greater shipping charges and rising commodity prices all contributed to the sharpest increase in average cost burdens across the construction sector since August 2008.

The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index posted 53.3 in February, up from 49.2 in January, to signal a solid increase on overall construction output. The index has registered above the 50.0 no-change mark in eight of the past nine months.

Residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January. There were some reports citing temporary delays on site arising from adverse weather and supply chain issues (especially for timber).

The slowdown in house building was more than offset by the sharpest rise in commercial work since last September and a slower fall in civil engineering activity. Survey respondents commented on contract awards for commercial building that had been delayed earlier in the pandemic, and some reported a boost from infrastructure work related to major transport projects.

New order volumes increased for the ninth consecutive month in February and the rate of expansion accelerated from the subdued pace seen at the start of the year. Construction companies cited improving demand across a range of sources, including residential development, new opportunities in the commercial segment and public sector infrastructure spending.

According to Glenigan, a few regions experienced relatively strong performances for project-starts during the three months to February: the north east witnessed the greatest growth against the previous year of 79% and experienced an increase of 18% compared to the preceding three months on a seasonally adjusted basis; and the east of England also performed well, and experienced increases of 10% against the previous year and the greatest rise against the preceding three months of 44%.

Work commencing on-site in London climbed 17% against the previous year and by a quarter compared to the preceding three months, and the north west saw project-starts increase, with rises during the period of 38% against the previous year and 19% against the preceding three months.

In contrast, Scotland and Wales experienced steep declines of 17% and 37% against the previous year. Compared to the preceding three months, work commencing on-site in Scotland declined by a fifth while project-starts in Wales fell 36%. The West Midlands experienced falls of 23% against the previous year and 5% compared to the preceding three months on a seasonally adjusted basis.