UK construction sector returns to growth in March

The UK construction sector returned to growth in March, according to a survey released on Friday.

The S&P Global construction purchasing managers’ index rose to 50.2 from 49.7 in February, marking the highest level since August 2023.

A reading below 50.0 indicates contraction while a reading above signals expansion.

The survey showed that civil engineering was the best-performing segment in March, as output levels increased at a marginal pace. Panel members cited increased work on infrastructure projects and resilient demand in the energy sector.

Meanwhile, housebuilding and commercial construction activity were broadly unchanged.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction output returned to growth in March as a renewed expansion of civil engineering work was supported by more stable conditions in the housing and commercial building segments. The marginal overall rise in total construction activity ended a six-month period of contraction.

"The near-term outlook for construction workloads appears increasingly favourable as order books improved again in March and to the greatest extent for just under one year. Construction companies generally commented on a broad-based rebound in tender opportunities, helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024."

Moore said staff hiring was a weak spot for the construction sector amid lingering concerns about margin pressures and continued risk aversion among major clients.

"Construction firms often reported delays with replacing departing staff, which led to a decrease in total employment numbers for the third month in a row," he said.