Construction PMI: Jump in construction activity but blighted by housebuilding
05 May 2023
According to the latest PMI data by S&P and CIPS, the headline construction PMI rose to 51.1 in April, up from 50.7 in March.
The data shows an increase in commercial work and civil engineering activity. However, the figures are blighted by the steepest decline in residential construction output since May 2020.
Commercial building was the fastest-growing area of the construction sector in April (53.9) and civil engineering activity (52.0) also picked up last month. House building was the weakest-performing subsector (43.0). The rate of decline for total residential work was the steepest for nearly three years.
Commenting on the data, Kelly Boorman, partner and national head of Construction at RSM UK, said: ‘The sharp fall in housebuilding activity underscores the tough economic challenges that remain as the squeeze from the cost-of-living and higher mortgage rates are still biting. While the housing volumes have seen a significant fall and house prices are predicted to continue to fall by 5% over 2023, mortgage enquires saw an increase in March 2023 as buyer sentiment improves with expected energy price reduction and interest rate stabilisation.
‘The good news is other parts of the construction sector are motoring on. Bottlenecks in supply chain lead times have eased and material costs have stabilised which means construction businesses can continue to plan and procure carefully, tendering for government and infrastructure contracts while watching their margins.
‘The economy is working hard. With inflation and interest rates expected to fall as we head towards 2024, and the loosening of rules around attracting migrant labour, there’s a lot to play for in terms of increased productivity and improving performance for this important sector in the UK economy.’
The data shows an increase in commercial work and civil engineering activity. However, the figures are blighted by the steepest decline in residential construction output since May 2020.
Commercial building was the fastest-growing area of the construction sector in April (53.9) and civil engineering activity (52.0) also picked up last month. House building was the weakest-performing subsector (43.0). The rate of decline for total residential work was the steepest for nearly three years.
Commenting on the data, Kelly Boorman, partner and national head of Construction at RSM UK, said: ‘The sharp fall in housebuilding activity underscores the tough economic challenges that remain as the squeeze from the cost-of-living and higher mortgage rates are still biting. While the housing volumes have seen a significant fall and house prices are predicted to continue to fall by 5% over 2023, mortgage enquires saw an increase in March 2023 as buyer sentiment improves with expected energy price reduction and interest rate stabilisation.
‘The good news is other parts of the construction sector are motoring on. Bottlenecks in supply chain lead times have eased and material costs have stabilised which means construction businesses can continue to plan and procure carefully, tendering for government and infrastructure contracts while watching their margins.
‘The economy is working hard. With inflation and interest rates expected to fall as we head towards 2024, and the loosening of rules around attracting migrant labour, there’s a lot to play for in terms of increased productivity and improving performance for this important sector in the UK economy.’
