The S&P Global UK Construction Purchasing Managers’ Index rose to 50.2 in March from 49.7 the previous month, its highest level since last August. A reading above 50.0 indicates growth.  

Companies added that new orders expanded at the fastest pace since last May.  

Although, firms remain cautious about staff hiring, with employment numbers falling for the third month running in March.  

Civil engineering was the best-performing segment last month, with output levels “increasing at a marginal pace,” says the data firm’s survey.  

While housebuilding and commercial construction activity were “both broadly unchanged”.  

Construction companies were upbeat about their prospects for business activity over the next 12 months. Around 49% of firms anticipate a rise in output levels, while only 11% predict a decline.  

However, optimism has eased since February, with last month’s mark falling to the lowest level this year to date.  

S&P Global Market Intelligence economics director Tim Moore says: “The near-term outlook for construction workloads appears increasingly favourable as order books improved again in March and to the greatest extent for just under one year.   

“Construction companies generally commented on a broad-based rebound in tender opportunities, helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024.”  

The data comes as house prices grew in March on a quarterly basis, by 2%, although annual growth slowed to 0.3%, from 1.6% in February, according to data from Halifax today.  

MHA head of real estate and construction Atul Kariya points out: “While the slight rise in today’s construction PMI data is positive news and reflects improved sentiment from an admittedly low base, it is certainly not a sign of sustained recovery in the sector, and conditions remain challenging.  

“Activity in the commercial sector is picking up steadily although typically contracts are continually being deferred to later in the year. Housebuilders have had a mixed 2024, with the year starting well but a subsequent dip in February and March.   

“Despite the drop in house prices last month reported this morning by Halifax our clients are anticipating that sentiment will improve as we head into late spring and early summer, as it typically does every year, as pressures are easing with interest rates probably peaking, mortgage rates falling again, and material and labour costs stabilising, offering a window of opportunity to the sector.”  

Beard finance director Fraser Johns adds: “While it certainly feels like the sector is turning a corner, and the bumps in the road to recovery are levelling, we still shouldn’t take these improving conditions or the growing confidence among clients for granted.

“There’s still challenges out there and those still feeling considerable pressure. A mature approach to tendering, as well close partnerships with both customers and suppliers will still be necessary to sustain this positive trend.”