After two consecutive months of decreases, British construction activity climbed at its strongest rate in nine months in February as a resurgence in commercial work and civil engineering helped counteract a persistent decline in house-building, a poll revealed on Monday.
The S&P Global/CIPS UK Purchasing Managers’ Index (PMI) for the construction sector increased to 54.6 in February from 48.4 in January, exceeding economists’ median expectation of 49.1 in a Reuters poll and reaching its highest level since May 2022.
The sudden uptick is consistent with Friday’s services PMI, which expanded at its fastest rate since June. This has allayed many analysts’ worries that Britain’s economy was about to enter a recession.
Cutbacks in new home construction projects, according to Tim Moore, economics director at S&P Global, continued to be a weak point for activity in the construction sector.
A decline in demand for new homes due to rising borrowing prices and an increase in the cost of living has slowed the housing industry in Britain in recent months.
The mortgage company Nationwide said last week that house prices fell 3.7% since their peak in August 2022, or 1.1%, and that the year-over-year decline in February was the worst since 2012.
The residential building sector of the construction market had the weakest performance, as residential construction declined for the third consecutive month. Builders attributed their difficulties to slower client demand and rising mortgage rates.
A quarter fewer homes will be built this year than in 2022, according to an estimate made last week by British homebuilder Taylor Wimpey.
Both new order growth and commercial construction were at their highest levels in nine months.
According to certain businesses, clients’ confidence in the commercial sector has increased due to waning recessionary anxieties and a brighter future for the world economy, Moore added.
Builders were still hindered by a slowdown in job creation and cost-cutting initiatives, but the peak of price pressures appeared to have passed and input cost inflation was at its lowest level since November 2020.
The broader all-sector PMI, which includes previously disclosed manufacturing and services data, increased from January’s 48.5 to 53.2 in February, reaching its highest level since last July.