Growth in the UK construction sector gained momentum during May. For the first time since May 2022, all three monitored categories saw activity increase during the month as housing activity returned to growth.
However the expansion in activity on residential projects was only marginal. The sharpest increase in activity was seen in the commercial category where the rate of growth accelerated to a two-year high. Meanwhile, civil engineering activity rose at a solid, but slightly softer pace.
The headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – rose to 54.7 from 53.0 in April, pointing to a marked increase in activity that was the fastest for two years.
S&P Global Market Intelligence economics director Andrew Harker commented: “The UK construction sector looks to be building good momentum as we approach the middle of 2024, highlighted by activity increasing at the fastest pace in two years during May.
“Particularly pleasing was the broad-based nature of the rise in activity as work on housing projects increased for the first time in more than a year-and-a-half.”
He added: “Firms are gearing up for further growth in the months ahead, posting renewed expansions in both employment and purchasing activity as workloads increase.”
Shawbrook managing director of development finance Terry Woodley said a third consecutive rise in construction output should provide developers with further optimism.
“However, market volatility and the possibility of predicted interest rate cuts being pushed back to later in the year mean lenders have had to raise rates in some areas, an additional cost for developers to factor in, alongside the rising costs of materials and labour.”
He added: “Many developers will now be turning their attention towards party manifestos ahead of the upcoming election, and will be hoping to see proposals and regulation reforms introduced to streamline planning processes and unlock the UK’s housebuilding potential. Developers are also hoping for additional support for first time buyers – with 86% hoping that the next government introduces further measures to assist buyers and ramp up building, according to Shawbrook’s latest research.”
