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Building boom as UK construction activity hits six-year high

·Senior City Correspondent, Yahoo Finance UK
·2 min read
Construction site in the Jewellery Quarter on 30th March 2021 in Birmingham, United Kingdom. There are several major redevelopment works currently in this old and prestigious area near the city centre, with much of the old jewellers gone and being replaced by offices or residential homes. (photo by Mike Kemp/In Pictures via Getty Images)
Construction site in the Jewellery Quarter on 30th March 2021 in Birmingham, United Kingdom. Photo: Mike Kemp/In Pictures via Getty Images

Britain's ongoing lockdown has not been enough to stop a building boom, according to new data.

Closely watched private sector data published on Thursday showed UK construction activity hit a six-and-a-half-year high last month. 

IHS Markit's purchasing managers' index (PMI) for the construction sector registered at 61.7 in March. It marked a sharp acceleration on February's figure of 53.3 and a big upgrade from an earlier "flash" estimate. 

PMIs are given on a scale of 0 to 100. Anything above 50 signals growth in activity, while anything below means activity is contracting. March's figure was the highest reading since September 2014.

IHS Markit said it found "robust growth" in all sub-sectors of construction and reported job creation in the industry at a 27-month high.

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"March data revealed a surge in UK construction output as the recovery broadened out from house building to commercial work and civil engineering," said Tim Moore, economics director at IHS Markit. 

"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."

The construction data is the latest rosy UK data to emerge, suggesting the economy could be on the verge of a reopening boom. Similar survey data for the service sector, published on Wednesday, showed strong growth as businesses prepare to reopen. Earlier this week the IMF upgraded its forecasts for UK GDP growth this year.

"The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects," Moore said.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, which helped compile the data, said construction was "full of the joys of spring" but said inflation in raw material prices could prove a "spanner in the works."

"Supply chains are still underperforming and almost half of the survey respondents said they had experienced longer delays and higher costs," Brock said. "If this continues, it could easily cool the sector down a notch."

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