U.K. construction growth rebounds in April on civil engineering projects, PMI rises to 53.1

Construction firms in the U.K. posted a strong beginning to the second quarter of this year, aided by swift rises in civil engineering and residential building activity. Data for April also indicated towards the most solid upturn in incoming new work in 2017. Survey respondents have attributed this to resilient economic backdrop and a sustained rebound in client demand.

The seasonally adjusted Markit U.K. Construction PMI rose to 53.1 in April from March’s 52.2. This indicated towards a strong increase in the overall construction output. The latest figure was quite lower than the post-crisis peak witnessed in January 2014. However, it still hinted at the sharpest pace of growth so far in 2017.

Civil engineering was the best performing sub-category of construction activity in April, with the pace of expansion the most rapid since March 2016. Residential building growth also accelerated to a four-month high. Commercial work rose just a bit and at a weaker pace than in March. Data for April indicated towards a strong upturn in new work received by construction firms in the U.K., with the pace of growth the most rapid witnessed so far in 2017. But mirroring the trend witnessed for business activity, the latest upturn in new work stayed much slower than witnessed at the peak phase of the rebound in early 2014.

Increased volumes of new work encouraged further job creation throughout the construction sector in April. The pace of employment growth was the most solid since May 2016. Survey respondents showed additional pressures on the availability of sub-contractors in April, which contributed to signs of challenges in hiring skilled labor, noted Markit.

Demand for construction materials rose due to a sustained rise in new work as underlined by a renewed upturn input purchasing in April. This added to a sharp and accelerated deterioration in vendor performance.

Average cost burdens rose sharply in April, but the pace of inflation continued to moderate from the five-and-a-half year peak witnessed at the beginning of this year. Higher prices were attributed to exchange rate factors and increased costs of energy and fuel.

In the meantime, several survey respondents expect construction output to rise over the year ahead. The degree of sentiment fell fractionally since March; however, it continues to be above the post-referendum low seen in July 2016, stated Markit.