UK construction sector booms as lockdown eases - PMI

UK construction output rose strongly in April as Covid-19 restrictions eased but costs increased at the fastest pace for at least 24 years, a survey showed.

The IHS Markit/CIPS UK construction purchasing managers' index recorded a score of 61.6 in April, broadly in line with a six-year peak established in March. A reading of 50 or more indicates growth.

Commercial work was the best-performing category in April as the economy reopened and clients' confidence grew. Housebuilding rose strongly but at a weaker rate than in March but civil engineering had its fastest pace of recovery since September 2014 as work on big infrastructure projects continued.

The index has shown growth in 10 of the past 11 months and total new work rose for the 11th month running in April. Order books increased at their fastest pace since late 2014 and firms hired workers at the steepest rate since December 2015.

Purchases of materials rose at their fastest pace since 2014 and supply chains were stretched with Brexit sometimes adding to pressure from high demand. As a result, industry costs rose at their fastest rate since the survey began in April 1997, led by steel, timber and transport.

Tim Moore, economics director at IHS Markit, said: "The UK construction sector is experiencing its strongest growth phase for six-and-a-half years, with the recovery now evenly balanced.

"New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects. This added to the spike in workloads from robust housing demand and the delivery of major infrastructure programmes such as HS2."

The construction sector was upbeat about growth prospects. More than half of respondents expected business activity to increase in the next 12 months and only 7% forecast a decline.