Latest construction activity from firms survey

Construction activity continued to increase in September, accelerating at the fastest pace since April 2022, according to the latest update to the S&P Global UK Construction Purchasing Managers’ Index.

The PMI, which tracks changes in the volume of business activity through a monthly survey of around 150 construction firms, was at 57.2 in September, up from 53.6 in August. Anything above 50 signifies an overall increase in activity, and the index has now shown overall growth for seven months.

At a sector level, all three categories of construction saw increases in September. Civil engineering was the best-performing, reaching its highest level since June 2021, with respondents pointing to robust demand for renewable energy infrastructure and a general uplift in work on major projects.

Commercial activity also showed solid growth, with reports of lower borrowing costs and domestic political stability, while housing activity experienced an upturn, helped by improving market conditions and rising confidence.

Respondents reported increased input prices in September, with the rate of inflation rising at the fastest pace since May 2023. Firms pointed to higher prices for some raw materials, as well as suppliers passing on higher wages.

S&P Global also reported:

• Total new orders expanded for the eighth month running.
• Subcontractor usage decreased again in September and subcontractor availability increased. There was a marginal rise in subcontractor rates.
• Employment numbers improved, with recruitment activity picking up, although some firms struggled to replace staff due to ongoing cost constraints.
• Suppliers’ delivery times shortened further in September, though some respondents said increased house building demand could be affecting the supply of some materials. Firms also expressed concern about the supply and pricing of steel, due to the closure of domestic blast furnaces.

Karl Horton, BCIS Chief Data Officer, said: ‘Although some firms reported a post-election rebound in sales enquiries, there is still a lot of uncertainty around the construction sector as we await the Autumn Budget.

‘Despite pledging to invest in growth, there have been hints at potential cuts to major projects. While the PMI has shown positive movement in recent months, we might see business optimism dented when the government sets out its spending priorities.’

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