The Markit/CIPS UK Construction Purchasing Managers Index (PMI) survey for May signalled “a solid expansion of activity”.
However, civil engineering contractors saw a reduction in activity for the first time in five months.
House-building expanded after posting a contraction in April, but the rate of increase was below the long-run trend.
Commercial construction was again the strongest performing of three broad sectors, for the second month running.
UK construction companies reported a marked rise in incoming new business during May that was in line with the historical average. Anecdotal evidence suggested that a general increase in opportunities to tender and the conclusion of protracted contract negotiations had led to the latest rise in new business.
Sustained growth of both new contract wins and activity led to an overall increase in employment in May that was the first since June 2010. However, the rate of job creation was modest, with continuing reports by some companies of limited new work and job cuts acting to moderate the overall increase in staffing levels. Meanwhile, subcontractor usage continued to fall.
Markit economist Sarah Ledger, author of the UK Construction PMI, said: “Construction sector activity grew again in May, with the rate of expansion accelerating slightly since April. Moreover, new order growth was marked, suggesting that increasing levels of output will be sustained.
“A look at the sub-sectors monitored shows a mixed picture, with levels of civil engineering activity down markedly, but a return to growth for housing. Commercial output growth was broadly consistent month-on-month, with the average for the quarter so far outpacing that of Q1.
“Positive sentiment regarding future business activity rose to a one-year high, although concerns over public sector spending cuts continue to weigh on confidence.”
Chartered Institute of Purchasing & Supply (CIPS) chief executive David Noble said: “The millstone of public spending cuts can be seen clearly in this month’s construction PMI, but aside from the unsurprising decline in civil engineering activity, the overall figures are not quite so foreboding.
“Sustained growth of commercial activity and reports of an unblocking of order books is much needed good news. It remains to be seen whether a marked expansion of commercial projects will help to replace what has been lost elsewhere in the coming months, but it has contributed to a small improvement in confidence. This is further reflected by the fifth month of rising purchasing activity, and the first – albeit modest – growth in employment for eleven months.
“It is encouraging to see a return to growth in the housing sector after April’s blip but there may be a long way to go before underlying demand for new properties, whether purchase or rental, takes the edge off market volatility.”
Got a story? Email news@theconstructionindex.co.uk
