Construction sector rebounds in February
Activity in construction sector bounced back last month amid boost from commercial work
UK construction companies experienced a solid return to growth in February after a setback at the start of 2021, according to the latest PMI data compiled by IHS Markit. New orders also regained momentum as project starts increased in anticipation of improving UK economic conditions over the course of the year.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index posted 53.3 in February, up from 49.2 in January, to signal a solid increase on overall construction output. The index has now registered above the 50.0 no-change mark in eight of the past nine months.
Residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January. However, the slight slowdown in house building was more than offset by the sharpest rise in commercial work since last September and a slower fall in civil engineering activity.
Survey respondents commented on contract awards for commercial building that had been delayed earlier in the pandemic and some reported a boost from infrastructure work related to major transport projects.
New order volumes increased for the ninth consecutive month in February and the rate of expansion accelerated from the subdued pace seen at the start of the year, with construction companies citing improving demand across a range of sources, including residential development, new opportunities in the commercial segment and public sector infrastructure spending.
Improving order books and early signs that the vaccine rollout will release pent up demand also led to the strongest degree of construction sector optimism for more than five years.
Tim Moore, economics director at IHS Markit, which compiles the survey, said: ‘Construction work regained its position as the fastest-growing major category of UK private sector output in February.
‘The rebound was supported by the largest rise in commercial development activity since last September as the successful vaccine rollout spurred contract awards on projects that had been delayed at an earlier stage of the pandemic.
‘House building is still the engine of recovery for the construction sector, although there was a loss of momentum since January as adverse weather and longer wait times for materials contributed to some temporary delays on site.
‘Civil engineering activity has been somewhat subdued in recent months, but survey respondents continued to cite the positive outlook for infrastructure work on major transport projects as a factor helping to boost confidence in the construction sector.’