Construction buyers reported the sharpest rise in output since December 2018 in February this year, as housing and commercial work underpinned a rebound in activity.
But the spectre of a full-blown coronavirus outbreak could yet prove to be the “fly in the ointment” when it comes to further growth.
That’s according to the latest IHS Markit/CIPS UK construction purchasing managers’ index (PMI), which found that there was a return to business activity growth during February following a nine-month period of declining workloads.
The index registered a score of 52.6 in February (where 50 indicates no change), up from 48.4 in January. The latest reading also indicated the fastest rate of construction output growth for 14 months.
Residential activity was the best-performing construction category, with the strongest expansion of housing activity since July 2018. Commercial work also posted its fastest increase in business since November 2018. Meanwhile, civil engineering experienced a “marginal” rate of decline during the month.
The index also recorded a “strong” recovery in new orders across construction, with the increase in new work the steepest for just over four years, with respondents citing a boost from increased infrastructure contract awards, including those related to HS2.
Tim Moore, director at IHS Markit, which compiles the survey, said: “February’s survey data adds to signs that the UK construction sector has started to rebound after a downturn through the second half of last year. Growth of business activity was stronger than at any time since the end of 2018, supported by the fastest rise in new orders for just over four years. Some construction firms suggested that the recovery in output would have been even stronger had there not been disruptions on site from severe weather conditions in February.
“There were widespread reports that pent-up demand released since the general election had helped to boost workloads, especially in relation to house building and commercial construction projects. Civil engineering activity moved another step closer to stabilisation in February. A number of survey respondents commented that contract awards from HS2 and other major transport projects had the potential to boost infrastructure work at their businesses in the year ahead.
“While construction order books have begun to recover in the opening part of 2020, the fly in the ointment is the uncertain impact of the coronavirus outbreak on UK economic growth prospects. A renewed slowdown could see domestic investment spending put back on hold and dampen the outlook for the UK construction sector.”
