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UK construction surges ahead in March

Total Activity Index by category

Last month saw UK construction output expand at sharpest pace since September 2014

THE recovery in UK construction output gained considerable momentum in March, supported by robust rises in house building, commercial work and civil engineering.

Adjusted for seasonal influences, the IHS Markit/CIPS UK Construction Total Activity Index registered 61.7 in March, up sharply from 53.3 in February. The latest reading signalled the strongest rate of construction output growth since September 2014.

Housebuilding (index at 64.0) was the best-performing category, with growth the fastest since July 2020. Strong increases in activity were also seen in commercial construction (62.7) and civil engineering (58.0) in March, with the index readings for both segments the highest since the second half of 2014.

Survey respondents often commented on the mobilization of delayed projects, especially in areas such as hospitality, leisure, and office development. There were again reports of a boost from major infrastructure projects in March, as well as higher workloads due to greater spending on residential construction work and rising new home sales.

Improving client demand and contract awards on projects that had been put on hold earlier in the pandemic contributed to a steep upturn in new orders during March. Moreover, the rate of expansion accelerated to its fastest since September 2014.

The survey also indicated a strong degree of confidence towards the year ahead outlook for construction activity. Growth projections were the most upbeat since June 2015, reflecting confidence in the UK economic outlook, the improving pandemic situation and pent-up demand.

Tim Moore, economics director at IHS Markit, which compiles the survey: ‘March data revealed a surge in UK construction output as the recovery broadened out from house building to commercial work and civil engineering. Total activity expanded to the greatest extent for six-and-a-half years as residential spending remained robust, commercial projects restarted and infrastructure contract awards moved ahead.

‘Improving confidence among clients in the commercial segment was a key driver of growth, with development activity rebounding in sectors of the economy set to benefit the most from the improving pandemic situation. The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, added: ‘Construction was full of the joys of spring in March with a sudden leap into solid growth fuelled by across-the-board rises in workloads in all sectors. The commercial pipeline was particularly spectacular giving its best performance since late-2014.

‘Business confidence was also standing tall with future optimism about the next 12 months the highest since June 2015, which suggests it is mostly plain sailing now that lockdowns are ending and vaccine programmes are under way.’

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