Construction Industry Growth
Experts have hailed a “real recovery” for the construction industry after activity grew at the fastest rate since May 2022.
Construction News is reporting that the S&P Global UK Construction Purchase Manager’s Index jumped three points from 52.2 in June to 55.3 in July, the fifth consecutive month of growth. The index tracks total activity in the industry, with any figure over the neutral mark of 50 indicating growth.
Civil engineering activity grew the fastest, although commercial activity and housing also increased last month. A raft of new orders buoyed the growth in activity, with survey respondents reporting increased customer confidence bringing stalled projects back into action.
Construction firms increased staffing for the third month in a row and increased purchasing activity by the highest level in two years. The sustained growth suggests a recovery from gloomy figures earlier in the year, when the index reported a decline in construction activity for seven months running.
Brendan Sharkey, construction partner at accountancy firm MHA, said the data showed the sector had moved “from green shoots to a real recovery”, citing easing interest rates, improving supply chains, competitive pricing and fewer labour shortages as reasons for celebration.
However, he raised concerns about the cancellation of major infrastructure projects including the Stonehenge tunnel, adding that government indications of spending cuts “has led to nervousness that the recent news is only the tip of the iceberg and more will be announced in due course”.
Max Jones, director of infrastructure and construction at Lloyds Bank, added that many contractors were feeling upbeat and had the confidence to invest in growth, technology and sustainability.
He said: “Firms will hope this investment translates into helping bolster pipelines of new work. If successful, these efforts will see the construction industry become a more important partner towards driving future growth.”
Jordan Smith, technical director at consultancy Thomas & Adamson, said there was “genuine optimism” that the new government’s plans would act as a further catalyst for growth across the whole construction industry.
“Our experience is that the sector’s recovery has been relatively patchy in the recent period, with new projects largely coming via specific sectors – such as refurbishment of existing assets and public sector works.
“We are hopeful this recovery and increased spending will be spread more evenly across multiple sectors and throughout the UK economy over the remainder of the year.”
Jennie Jones, partner at law firm Brabners, echoed Smith’s optimism, adding the results were “a testament to the sector’s pivotal role in driving economic gains across the country”.
She said: “Moving ahead, it will be crucial for the new government to help maintain a stable economic environment and invest in infrastructure projects that will sustain this growth trajectory.”
