Buyers report busy April despite housing slowdown

Grant Prior 1 month ago
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Construction buyers reported a rise in activity in April for a third month in a row despite the fastest fall in housing work for nearly three years.

The bellwether S&P Global/CIPS UK Construction Purchasing Managers’ Index hit 51.1 in April from 50.7 in March keeping it above the neutral 50 value.

Rising volumes of commercial work and civil engineering activity helped to offset the steepest decline in residential construction output since May 2020.

New orders received by construction companies increased for the third consecutive month in April. The rate of expansion accelerated slightly since March and remained faster than
seen on average in the second half of 2022.

Higher levels of new work were attributed to resilient client demand, especially for commercial building.

Supply chain improvements also continued in April as lead times among vendors shortened to the greatest extent for just over thirteen-and-a-half years.

A combination of improved supply and relatively subdued demand helped to alleviate cost pressures across the construction sector.

The rate of purchase price inflation was the slowest since November 2020 and broadly in line with the long-run survey average.

Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey said: “The construction sector stretched out its current phase of expansion to three months in April, signalling a modest rebound from the downturn seen at the turn of the year.

“Commercial building work continued to outperform, helped by stabilising domestic economic conditions and a gradual rebound in business confidence. Civil engineering activity was also a driver of construction growth during April, with rising infrastructure work contributing to the best phase of expansion in this segment since the first half of 2022.

“However, the return to growth for UK construction output appears worryingly lopsided as residential work decreased for the fifth successive month.

“Extended delays on new housing starts were reported again in April, due to a considerable headwind from elevated mortgage rates and weak demand.

“While there have been some signs of a recent stabilisation in market conditions, this has yet to feed through to construction activity. In fact, the latest reduction in residential building was the fastest since May 2020.

“On a more positive note, the latest survey illustrated a further slowdown in input price inflation across the construction sector.

“Softer cost pressures partly reflected a sustained improvement in supply chain performance, with lead-times for deliveries of products and materials shortening to the greatest extent since September 2009.”

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