Output rise in April – but housebuilding still suffers

Construction output saw a steady rise in April, despite house building being at its lowest since May 2020. 

UK construction activity has risen for the third month running, but residential building has fallen to its lowest in three years, a new report shows. 

The S&P Global/CIPS UK Construction Purchasing Managers’ Index recorded construction activity at a 51.1 high in April, up from 50.7 in March. 

Rising volumes of commercial work and civil engineering helped with the increase in activity, with improvements in supply conditions and the availability of materials and reduction in delays. 

Respondents to the survey attributed the fall in house building to softer market conditions and higher borrowing costs. 

Full scope

Commercial building was the fastest growing area in April (index at 53.9), due to improved economic conditions helping to boost clients’ willingness to spend.

Civil engineering increased at 52.0 because of the resilient pipelines of work on infrastructure projects. 

House building declined to 43.0, which economics director at S&P Global Market Intelligence, Tim Moore, attributes to “elevated mortgage rates and weak demand.” 

Despite the fall, the housing market shows some signs of recovery, reported by Reuters. 

According to the Bank of England, mortgage lending reached its highest level in March since last October.

Homebuilders Barrat, Persimmon, and Taylor Wimpey also reported  a recovery in buyer interest. 

Further benefits from overall activity include alleviated cost pressures and the shortening of lead times for vendors. 

Impact

Construction companies anticipate further increase in activity throughout the year. 

Around 44% of respondents anticipate a rise in output in the next 12 months, with only 13% anticipating a fall. 

The former believe that activity will increase due to client demand, whereas the latter are cautious about the housing market and rising interest rates. 

“The mixed picture found in the UK construction industry in April is representative of an economy still trying to recalibrate after being buffeted by the manifold challenges of political instability, lockdowns and supply chain pressures,” said Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS). 

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