Upturn in housebuilding boosts UK construction sector - PMI

6th Mar 2024 08:13

(Sharecast News) - The UK's hard-pressed construction sector strengthened last month, a closely-watched survey showed on Wednesday, led by a turnaround in housebuilding.

The latest S&P Global UK construction purchasing managers' index came in at 49.7 in February, still in negative territory but a notable improvement on January's 48.8.

A reading below the neutral 50.0 mark indicates contraction, while one above it suggests growth.

It was also the highest since August and better than expected, with most analysts looking for 48.0.

Within that, house building saw the biggest turnaround, jumping to 49.8 - the highest since November 2022 - from 44.2 a month earlier.

Overall, business optimism was the most upbeat since January 2022. Respondents said they expected an upturn in customer demand over 2024, as economic and financial conditions strengthened.

New work, meanwhile, rose for the first time since July.

Tim Moore, economics director at S&P Global Market Intelligence, said: "The forward-looking survey indicators provide encouragement that business conditions could improve in the coming months.

"However, a protracted downturn in activity has made construction companies cautious about their employment numbers. Staffing levels dropped for the third time in the past four months, and the latest round of job shedding was the steepest since November 2020."

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: "House buyers returning to the market, as expectations of interest rate cuts have grown, helped construction output stabilise in February.

"The underlying picture may be better than suggested by the PMI, given the wet weather in February could have caused some disruptions: the south of England saw the wettest February since records began in 1836.

"Buyers' surging confidence on the outlook suggests construction output will grow again soon. Costs, meanwhile, continue to rise only modestly."

A panel of 150 construction companies were surveyed between 12 and 28 February.