UK construction rebounds to nine-month high as recession fears ease

The UK’s construction sector recorded surprise growth last month because firms were boosted as recession expectations eased.

New figures showed that activity in the construction industry grew at a strong rate for nine months.

The latest S&P Global/CIPS construction purchasing managers’ index scored 54.6 last month, rising from 48.4 in January.

Any score below 50 is considered a decline whereas anything above is seen as growth.

It was sharply beyond the expectations of analysts, with a consensus of economists compiled by Pantheon Macroeconomics having still predicted monthly decline.

Tim Moore, economics director at S&P Global Market Intelligence, said: “Business activity in the UK construction sector returned to growth during February as a rebound in commercial work and civil engineering output helped to compensate for housing market weakness.

“Some firms noted that fading recession fears and an improving global economic outlook had boosted client confidence in the commercial segment.”
The report indicated that work on major infrastructure projects such as HS2 contributed to improved civil engineering activity for the month.

Civil engineering returned to growth with a reading of 52.3, while commercial construction was the strongest part of the sector with a 55.3 score for February.

Nevertheless, activity in the house-building sector decreased for the third month running.

Residential building saw its downturn ease slightly as it recorded a 47.4 reading, with firms highlighting “subdued market conditions due to elevated interest rates”.

John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS), said: “New order levels were also at their highest since November 2022 but these strong numbers belie the fact that there is uneven growth in building activity in the UK.

“Commercial and civil engineering projects dominated this performance with activity on projects such as HS2 and commercial builds.

“Residential building on the other hand was the odd one out with a third month in contraction as mortgages rates put a dampener on the number of house purchases and buyers were unwilling to commit.”