U.K.’s construction sector’s activity grew sharply in June, PMI index rises to 55.3

U.K.’s construction sector saw a sharp turnaround in performance in June, showed the survey data, as the phased restart of work on site aided in lifting output volumes and boost business sentiment. The headline seasonally adjusted IHS Markit construction total activity index rose to 55.3 in June from May’s 28.9, signalling a strong rise in total construction output. Furthermore, the latest reading hinted at the steepest rate of growth since July 2018. Higher levels of business activity were overwhelmingly attributed to the reopening of the U.K. construction supply chain after stoppages and business closures in the early stages of the COVID-19 pandemic.

Residential building was the best-performing area of construction activity in June. About 46 percent of survey respondents saw a rise in housing activity, while only 27 percent saw a reduction. The latest growth of residential construction work was the steepest for just under five years. Commercial work and civil engineering activity also returned to growth in June, although the rates of growth were weaker than seen for house building.

New business volumes rose a bit in June, which ended a three-month period of fall. Nevertheless, the pace of new order growth was much weaker than seen for business activity, reflecting ongoing hesitancy among clients and longer lead-times to secure new contracts. A number of construction companies noted that new work related to infrastructure projects was an important source of growth in June. Employment figures dropped at the end of the second quarter, according to the latest survey data. Reports from panel members implied that concerns regarding the longer-term demand outlook had led to cautious hiring policies and, in some cases, redundancies alongside furlough arrangements in June.

The index measuring business expectations for the year ahead continued to be historically weak, but rose to its highest since February in the midst of a boost from the reopening of work on site.