UK construction sector grows at fastest pace in two years

6th Jun 2024 09:32

(Sharecast News) - The UK construction sector grew in May at its fastest pace in two years, according to a survey released on Thursday.

The S&P Global purchasing managers' index for the sector rose to 54.7 from 53.0 in April, coming in above the 50.0 mark that separates contraction from expansion for the third month in a row. Analysts were expecting a decline to 52.5.

For the first time since May 2022, all three categories saw an rise in activity. The sharpest increase was seen in the commercial segment, where the rate of growth accelerated to a two-year high. Civil engineering activity rose at a "solid, but slightly softer pace", but expansion in activity on residential projects was only marginal.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "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.

"Firms are gearing up for further growth in the months ahead, posting renewed expansions in both employment and purchasing activity as workloads increase. Moreover, the supply-chain environment continued to improve in May. Companies were able to secure inputs much more quickly than in April and at prices that were only slightly higher than in the previous month on average. These factors should help constructors in their efforts to ramp up operations in line with greater new order inflows."

Matthew Pointon, senior commercial real estate economist at Capital Economics, said: "Growing confidence that the pricing correction is now over is spurring development and as interest rates fall back over the second half of the year that will give construction activity a further boost."