The United Kingdom’s construction industry is showing signs of a potential upturn, according to a recent survey. S&P Global’s purchasing managers’ index (PMI) for the industry reached 55.3 in July, indicating a strong expansion. This figure surpassed initial forecasts and is the highest score the sector has seen in over two years.
This growth comes after a slight slowdown in June, which was attributed to companies being hesitant to take on major projects due to the uncertainty surrounding the general election. However, with the election now settled, the construction sector has experienced a surge in new housing projects and an increase in overall activity, as reported by S&P Global.
Andrew Harker, economics director at S&P Global, commented on the positive findings, stating, “The election-related slowdown in growth seen in June proved to be temporary, with the pace of expansion roaring ahead in July. Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence.”
The report, which surveyed approximately 150 leading construction companies, revealed growth in all three key areas of the sector – housing, commercial building, and civil engineering. The most significant increase was seen in civil engineering, with the sharpest growth in two-and-a-half years. Additionally, new housing projects saw a resurgence after a recent decline due to high interest rates.
This positive news comes as the new government aims to stimulate the building of new homes through a revamp of the planning system. In the business world, water companies are facing a combined fine of £168 million, while HSBC has successfully lured a top British diplomat. Asia’s markets have also rebounded after a global decline.
Peter Arnold, EY UK’s chief economist, commented on the volatility in the construction sector’s survey results, stating, “As with the manufacturing and services surveys, the 2024 General Election appears to have injected some month-to-month volatility into the construction survey results, with a soft June followed by a stronger July as uncertainty cleared.”
Arnold also noted the positive details within the report, with new orders growing at the strongest pace in over two years, and an increase in hiring and purchasing activity. He concluded, “After a challenging couple of years, the construction sector appears to be in the early stages of a strong recovery.”
Paul Sloman from PwC also weighed in on the survey’s findings, stating, “This is a clear signal of recovery, market confidence, and growth for the sector.” He continued, “The sector’s well-documented challenges in skills shortages, training, and recruitment are being addressed, as employment has seen its fastest pace of growth in a year. This can be attributed to the agility and adaptability of construction businesses.”
