However, it was also the eighth successive month of job cuts, albeit at a slower rate than before.
These are the conclusions of the latest survey of purchasing managers.
The seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index (PMI) rose to 56.5, up from 53.7 in January and an eight-month high. (Anything over 50 represents growth.)
While civil engineering grew the most strongly, there was also a firm increase in housebuilding, ending a six-month period where housing activity was the weakest performing of the three areas monitored. Commercial activity increased at a solid pace in February, extending its current sequence of growth to 12 months.
UK construction companies reported a marked rise in new business during February and the rate of expansion accelerated for a third successive month, reinforcing the upward momentum in new order growth following the slowdown that began in Q3 2010.
The PMI is based on data compiled from monthly questionnaires sent to purchasing executives in more than 170 construction companies.
Purchasing managers reported that opportunities to tender had increased, with some companies also noting that decisions had been made on previously quoted work.
February data signalled a further reduction of staffing levels in the UK construction sector. Job cuts have been recorded for eight months running. The good news is that the latest decrease was the weakest in that period and a number of companies are starting to recruit in response to higher workloads.
Subcontractor also usage fell again in February. Despite this, rates charged by subcontractors rose marginally for the first time since August 2008.
UK construction companies increased their purchasing activity markedly in February, reflective of higher workloads. This led to a lengthening of suppliers’ delivery times, with delays further exacerbated by shortages of materials at vendors.
Input costs faced by construction companies in the UK increased at their fastest rate since August 2008 in February. Higher raw material prices, particularly for oil, fuel and steel, were cited as the main drivers of input cost inflation, which has been sustained for thirteen successive months.
UK construction companies were optimistic in February that activity would increase over the coming year, as overall economic conditions continue to improve and customer confidence increases. However, the degree of positive sentiment weakened since January, with concerns over cuts in public spending and low levels of bank lending impacting negatively on confidence.
Sarah Ledger, economist at Markit and author of the UK Construction PMI said: “February’s survey showed continued recovery in the UK construction sector following December’s weather-related decline in activity, with output rising at the fastest rate in eight months on the back of strengthening growth of new business.
“The latest figures therefore suggest that, having contracted by -2.5% in the final quarter of last year, the ONS measure of construction output should bounce-back into positive territory in Q1.
“Demand and supply side pressures continue to push up purchase prices, with construction costs rising at the fastest rate since August 2008 and delivery delays the worst for over three years. Concerns about rising costs and fears over cuts in public spending meant future business optimism remained subdued and well below the long-run average.”
David Noble, chief executive of the Chartered Institute of Purchasing & Supply, said: “A weather-beaten UK Construction sector is showing signs of repair, with stronger rates of activity and a rise in new business continuing the reversal of fortune since the end of 2010. However, this new phase of recovery is at least in part built on shifting sands.
“Overall, reports about new tenders becoming available and projects being confirmed will be a relief to firms which have suffered the consequences of a subdued market. The residential sector in particular appeared revitalised compared to recent months, with house building registering the fastest increase in activity since June 2010.
“As for manufacturing, the construction sector is suffering from higher input prices which increased considerably during February. 53% of panellists indicated a rise in costs since January. Companies who have carefully managed costs may be in a better position to deal with this and the likely further aggravations caused by the unrest in the Middle East.
“The situation is still fragile, however, considering the likely impact of government cuts. Concern about the level of bank lending is also having a negative impact on confidence. This is echoed by a further reduction in employment.”
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