The fastest housebuilding growth for almost two years underpinned “a sustained rebound” in UK construction orders in August, according to the latest S&P Global UK Construction Purchasing Managers’ Index.
Output came in at 53.6 last month, which saw the overall industry registered above the 50.0 no-change value for the sixth month in a row.
This latest reading was lower than July’s 26-month high of 55.3, “but still signalled a solid expansion of overall construction output”.
Residential work, with a 52.7 mark, was the only sub-sector to gain momentum, with growth accelerating to its fastest since September 2022.
“Higher levels of housing activity were supported by improving market conditions and lower borrowing costs,” the study says.
Commercial activity was the best-performing segment, at 53.7, “despite the pace of growth slipping to its lowest since March”.
Civil engineering activity, at 51.8, expanded at “only a moderate pace that was notably weaker than in July”.
The report adds: “Robust new order growth and a more supportive economic backdrop underpinned the latest recovery in construction output volumes.
“Employment numbers stagnated as cost considerations meant that some firms opted to delay backfilling vacancies during August.”
Shawbrook managing director of development finance Terry Woodley says: “The construction sector has hit the accelerator yet again, with August’s figures recording another rise due to strong activity and an increase in new orders.
“While the warm weather has certainly helped construction sites progress day-to-day projects, the recent interest rate cut and the government’s focus on boosting housebuilding will have increased developers’ sunny moods.
Woodley points out: “As a result, the long-term outlook for the sector looks positive.
“No doubt developers will be keeping a keen eye out for updates on the revisions to the National Policy Planning Framework, as well as any news regarding Labour’s commitment to employ 300 additional planning officers.
“Whether or not the Budget will shed more light on these developments is yet to be seen, but in the meantime, there’s plenty for developers to look forward to.”
S&P Global Market Intelligence economics director Tim Moore adds: “The UK construction sector appears to have turned a corner after a difficult start to 2024, with renewed vigour in the house building segment the most notable development in August.
“Residential work expanded at the fastest pace for almost two years as lower borrowing costs and a gradual recovery in market conditions helped to boost activity.”
