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Latest construction activity from firms survey

Published: 14/06/2024

Overall increased construction activity was reported for the third month running in the latest update to the S&P Global UK Construction Purchasing Managers’ Index.

The index, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, was at 54.7 in May, up from 53.0 in April, the fastest pace of growth for two years. Anything above 50 signifies an overall increase in activity.

Crucially, all of civil engineering, commercial work and housebuilding saw increases, ending a year and a half of reported decline in housebuilding, albeit with only marginal growth in this sector.

Commercial was the best-performing sector of the three in May, with the strongest growth for two years, while civil engineering saw another steady increase.

S&P Global also reported:

  • New orders increased for the fourth month running, with respondents citing improving demand conditions and the commencement of previously delayed projects.
  • An increase in employment numbers for the first time in 2024.
  • Business confidence at a three-month high, with firms hoping for a reduction in interest rates and improved economic conditions.
  • A marginal increase in input costs, with lead times shortened to the greatest extent in seven months.
  • A solid increase in subcontractor rates, alongside increased use and improvement in availability.

Chief Data Officer Karl Horton said: ‘The survey respondents reported modest inflation on input costs and the BCIS General Building Cost Index has been showing a similar trend.

‘We’re keeping a close eye on labour costs as demand picks up again across the industry. While inflation on materials has calmed considerably, labour is where we’re likely to see some pressure on wages given widely reported skills shortages and continued decline in the size of the workforce.

‘It’s encouraging to see respondents in the housing sector finally report a return to growth. The latest trading update from Bellway cited a “robust” spring selling season with customer demand benefiting from improved affordability.

‘However, affordability is still a widespread problem across more sectors than just housebuilding and, therefore, also viability of projects. The latest output figures for April show construction activity down overall by 1.4%, with the most significant monthly decreases in new work housing.’

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BCIS CapX provides a comprehensive, detailed and easy-to-use method of measuring cost movement for building and civil engineering. Widely used in the construction and infrastructure sector to help fairly allocate risk between the client and sub-contractors.

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