Growth in the UK construction industry rose sharply as the second half of the year got underway due mainly to activity in civil engineering, but caused strains on supply chains and input costs.
The S&P Global UK Construction Purchasing Managers’ Index (PMI), which tracks changes in total industry activity, showed 55.3 in July up from 52.2 in June.
This is a markup from a dip seen between May and June, and the fastest pace of activity in 26 months, signalling the election-related slowdown in growth seen in June only “proved to be temporary.”
Civil engineering activity saw the fastest rate of growth in more than two years, while housing projects returned to growth and commercial activity increased solidly.
July saw new orders during the month, as firms ramped up purchasing activity and raised staffing levels for the third month running.
New business expanded for the sixth month running, and the fastest since April 2022.
However, increased demand for inputs put some pressure on suppliers in July, while the rate of input cost inflation showed signs of picking up.
Andrew Harker, economics director at S&P Global Market Intelligence, said: “Firms saw the strongest increases in new orders and activity since 2022 as paused projects were released amid reports of improved customer confidence.
“The strength of demand moved the sector closer to capacity, bringing a recent period of improving supplier performance to an end.
“Inflationary pressures picking up will need to be watched closely if demand strength continues in the months ahead.”
Jordan Smith, technical director at Thomas & Adamson, (part of Egis Group), said: “The growth in construction activity is beginning to pick up pace again, with genuine optimism that the new government’s plans will act as a further catalyst for the sector as a whole.
“Our experience is that the sector’s recovery has been relatively patchy in the recent period, with new projects largely coming via specific sectors – such as refurbishment of existing assets and public sector works.
We are hopeful this recovery and increased spending will be spread more evenly across multiple sectors and throughout the UK economy over the remainder of the year.”
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