April UK construction sees sharpest output rise of 2017

Monday 22 May 2017

Construction growth accelerated in April to reach a four-month high, showing recovered momentum after a weak start to the year.

The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) increased to 53.1 from 52.2 in March. While the figures are lower than post-crisis peak witnessed in January 2014 (64.6), it is still the biggest increase in expansion so far in 2017. 

Civil engineering was the best performing sub-category of construction activity in April, putting in its fastest rate of expansion since March 2016. What’s more, growth of residential building accelerated, rising to a four-month high. 

New work received by UK construction companies was the highest seen so far this year but remained lower than the peak phase of recovery in 2014. 

Thanks to higher volumes of new work, more job creation was seen in April and the rate of employment growth was the strongest since May 2016. 

However, there was a lack of availability among sub-contractors and issues with recruiting skilled professionals, opening up opportunities for self-employed people with the right skills and experience. 

Demand for construction materials rose as a result of the increase in new work, leading to a sharp and accelerated drop in vendor performance. Lead-times from suppliers also increased to the longest time since June 2015. 

In a survey, 49 per cent of respondents said they expect a rise in construction output over the coming year, with just ten per cent predicting a fall. While this industry confidence shows a drop since March, it is significantly higher than the low levels seen following the referendum in July 2016.

Tim Moore, senior economist at IHS Markit and author of the Markit/CIPS Construction PMI, said: “April’s survey reveals a positive start to the second quarter of 2017, with a robust upturn in civil engineering activity helping to boost the construction industry. 

“There were also more encouraging signs from the house building sector, as growth recovered to its strongest so far this year.”

Mr Moore explained that the resilient economy has helped to increase client spending in April, with greater workloads resulting in the quickest pace of job creation since May 2016. 

The current climate could lead to excellent prospects for construction employees, but it is important to make sure finances are managed properly. Freelancer and contractor accountants can help with this by keeping professionals up to date with the latest regulations. 

By Victoria McDonnell

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