House building saw its fastest decline in almost three years last month while commercial building saw some increase, though more slowly than its February peak, according to the latest survey of purchasing managers.
However, the report from S&P Global, shows the ongoing problem of materials sourcing improving with delivery times from suppliers showing the fastest improvement for more than a decade as well as general improvement in the availability of supplies.
General optimism for future growth rebounded strongly from the two-and-a-half year low seen in December, largely reflecting signs of a turnaround in client spending and a more favourable outlook for the wider UK economy.
Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey said: “UK construction companies experienced a sustained rebound in output levels during March as work on civil engineering and commercial projects picked up for the second month running. Improved tender opportunities were also reflected in an upturn in new orders since February and the strongest rate of job creation for five months.
“A sharp and accelerated decline in house building was the main area of concern in March. Cutbacks to new residential projects in the wake of subdued demand and rising interest rates contributed to the sharpest fall in housing activity across the construction sector for almost three years.
“Despite worries about the near-term outlook for housing activity, expectations for total construction output during the year ahead were relatively upbeat in March. Growth projections were boosted by the fastest improvement in suppliers’ delivery times for more than a decade. Survey respondents often cited improved availability of construction inputs and subsequent hopes that purchasing price inflation would moderate in the months ahead.”
Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply, said: “A small uplift in construction activity in March shows the sector is heading in the right direction and at a stabilising pace, and with a few uplifting surprises along the way.
“Delivery times from suppliers improved at the fastest rate since November 2009 as stocks were unravelled and fewer orders from supply chain managers meant goods got through more quickly. Builders were also riding high with the highest levels of optimism since February 2022 and there was an uplift in hiring levels to maintain momentum.
“Strong inflationary pressures remained an obstacle to wider expansion at building companies however along with concerns over consumer affordability rates. With residential building still struggling and falling at the fastest rate since May 2020, it was the bigger projects like HS2 managed by the civil engineering sector that added fuel to the engine of construction growth this month.”
