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UK construction sector activity remained robust in March against a backdrop of rising inflationary pressures, S&P Global said Wednesday.
The S&P Global-CIPS UK construction purchasing managers' index was unchanged at 59.1 points in March, the same as in February. The latest reading signalled the joint-fastest rate of output growth since June 2021.
In addition, total new orders expanded at a robust and accelerated pace in March, with the latest rise the strongest since August 2021, it said.
S&P said the March data pointed to a continued rise in UK construction output, helped by the fastest increase in new work for seven months. However, escalating inflationary pressures and concerns about the economic impact of the war in Ukraine contributed to a sharp drop in business optimism. The degree of confidence about the growth outlook was the weakest since October 2020, it noted.
Tim Moore, economics director at S&P Global, said: ‘Commercial projects helped keep construction growth at its highest level since last summer as clients boosted spending in response to the roll back of pandemic restrictions. Civil engineering also fared well in March as work on major infrastructure contracts underpinned growth. Residential work found itself in the slow lane, however, as some firms noted that greater caution crept into spending decisions.
‘The construction recovery looks set to continue in the near-term as order books improved at the fastest pace for seven months in March. Input buying and job creation in the sector also remained indicative of strong underlying momentum... Intense inflationary pressures appear to have unnerved some construction companies. Business optimism slipped to its lowest since October 2020 on concerns that clients will cut back spending in response to rising prices and heightened economic uncertainty.’
The UK construction PMI was compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies.
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