UK construction activity fell in March to ‘well below market consensus’, data from the S&P Global/CIPS UK Construction PMI shows.

The March figure dropped to 50.7, below the market consensus of 53.5. This is down from the 54.6 recorded in February, which had increased from January’s figure of 48.4.

However the latest reading did signal a marginal overall increase in total construction output, with civil engineering works leading the growth.

Commercial building growth slowed from a nine-month high and housing activity contracted the most since May 2020, with firms citing fewer tender opportunities due to rising borrowing costs and a subsequent slowdown in new house building projects.

On a more positive note, total new work had risen the most since last July and the rate of job creation accelerated to its fastest since November 2020.

“Finally, business sentiment hit an over one-year high in March, recovering further from the two-and-a-half year low seen in December,” the report adds.

Responding to the PMI, MHA partner Joe Sullivan says the government should play its role in upskilling the next generation of construction workers.

“The spring Budget may not have shocked the sector but did little to inspire or help the housing or commercial markets over the long term. Contractors still engage with fixed price or even loss-making contracts, prioritising short-term cash inflow and team retention over medium-term profitability and working capital funding.

“Shortage of labour is now the single biggest headache for the sector. Vacancies have risen at a faster rate than across the economy as a whole, illustrating the need for the government to provide help quickly. It is clear stakeholders are moving towards improving recruitment and retention, this is too little and too slow. The sector must promote itself as an appealing industry for school leavers and graduates to have a sustained future.”