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The UK Construction industry sees a return to growth

Posted on Aug 02, 2018

The UK construction sector is entering its third month of continuous growth, and is seeing greater activity and higher recruitment levels, marking the return of optimism to the sector.

Last month, the UK Construction Purchasing Managers’ Index released data that revealed that growth in both residential and commercial property was at its highest level in the last seven months, and new orders are being received at the fastest recorded rate since May 2017.

Moreover, recruitment levels are up. To date, they are increasing faster than in the previous 12 months; this increase in demand has resulted in the highest increase in input prices since September 2017.

These developments have come as a surprise to many due to the negative forecasts during the beginning of 2018. The ‘Beast from the East’ saw a cold start to the year, and these severe weather conditions negatively affected the building sector, with February and March recording a significant downturn.

The gauge of activity on the purchasing managers index – on which anything above 50 reflects growth in economic activity – rose from 52.5% to 53.1% in May: the highest level in seven months. This defied economist’ expectations of a static reading.

Optimism in the industry is said to remain highest in the north-west, West Midlands, and Bristol. In these areas the market is said to remain buoyant. However, even London is seeing improvement in sentiment.

While these figure are somewhat flattered by comparison to the weaker data that was recorded at the beginning of the year, there has been a genuine increase in momentum, revealed through the increase in both growth and recruitment.