UK Construction Activity Growth Moderates In April

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The UK construction activity logged strong growth in April but the speed of recovery lost momentum amid weak new orders, survey results from S&P Global showed on Friday.

The construction Purchasing Managers' Index fell to 58.2 in April from 59.1 in March. A score above 50.0 indicates expansion.

Of the three main construction segments monitored by the survey, the fastest-growing remained commercial work, followed by civil engineering. Meanwhile, residential work remained the worst-performing sub-sector in April.

The near-term outlook for construction activity deteriorated in April as total new order volumes expanded at the slowest rate for four months. Respondents cited that higher costs and worries about the economic outlook acted as a brake on demand.

At the same time, employment grew at the fastest pace in three months in April. Companies recruited more people to deliver forthcoming projects and rebuild business capacity.

Further, the survey showed that higher levels of input buying have been recorded in each month since June 2020. Suppliers again struggled to keep up with demand for construction products and materials.

Purchase price inflation grew at the fastest pace since September 2021 largely due to the removal of red diesel subsidies.

The degree of optimism about future workloads reached the lowest since September 2020. Risk aversion among clients and persistently high inflation due to energy price rises weighed on expectations.

Tim Moore, an economics director at S&P Global, which compiles the survey said, "The construction sector is moving towards a more subdued recovery phase as sharply rising energy and raw material costs hit client budgets."

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