UK PMIs: Construction activity bounces back as paused projects get green light
UK construction activity bounced back in February as businesses gave the go ahead to projects that had been forced to be suspended due to the pandemic.
The IHS Markit/Cips purchasing managers (PMI) index for construction scored 53.2 in February, with any score above the 50-mark indicating growth.
That’s markedly ahead of analyst expectations of a score of 51, and means January’s contraction looks more to have been a blip than the start of a trend.
Residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January, IHS Markit said.
But this 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.
And construction work could yet be set for a boost after Rishi Sunak yesterday announced a tax “super-deduction” on investment on materials and plants to encourage investment.
New order volumes were already up for the ninth straight month in February.
Tim Moore, economics director at IHS Markit, said: “Construction work regained its position as the fastestgrowing 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.”
Mark Robinson, group chief executive at SCAPE, the UK’s leading public sector procurement authority, said: “Following a dip in activity at the start of the year, February’s return to form – combined with the initiatives announced in yesterday’s Budget – is likely to inspire greater confidence among contractors, as the UK emerges from lockdown.
“However, whilst the easing of restrictions is likely to stimulate an increase in output in the coming months, a steady stream of investment in communities and infrastructure is still necessary to ensure the construction industry can support and sustain long-term economic growth.
“The immediate £12bn earmarked for the Treasury’s new National Infrastructure Bank will play a vital role in that respect, but the projects this will enable need to be identified as soon as possible, if we are to achieve the regeneration needed post-pandemic.
“The Chancellor’s ‘super deduction’ tax relief should also encourage contractors to invest for growth, allaying fears about the increase in corporation tax and the prospect of a tepid recovery.”