Strong UK construction growth bolsters economy

Britain’s construction industry hit a four month high in April, beating forecasts and providing a reason for some optimism about the UK economy.

Construction sector celebrates a strong April

The economy has had a sluggish start to the year, with inflation impacting consumers. But this surprise growth in the construction industry could be a sign that things are looking up.

Markit’s construction PMI, which measures construction industry activity, was at 53.1 for April, up from 52.2 in March.

Building companies took on more staff last month to cater to an uptick in client demand, and civil engineering expanded faster than it has done for over a year. House building hit a four month high.

Tradesmen feeling optimistic

A Simply Business poll earlier in the year found that tradesmen were feeling upbeat, with 76 per cent predicting a good year for trade.

The latest Markit survey results paint a similarly optimistic picture, with only 10 per cent of respondents forecasting a fall in construction output, and around five times as many expecting a rise.

Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, said:

“With the biggest rise in new orders since the beginning of the year, the sector is in a strong pre-election position buoyed up by a hardy UK economy and strong client confidence. The housing sector offered up the best news recovering from last month’s minor blip and building on its strongest performance since the end of last year.”

Words of caution for construction

The good news, however, was tempered with some words of caution. The construction industry skills shortage persists, and Duncan Brock warns that this “must be addressed if the future strength of the sector is to be assured.” He also highlighted other issues that could hinder future construction growth, including rising commodity and labour costs and low stocks of essential materials.

Experts are also keen to stress how the outcome of Brexit negotiations could have a significant impact on the construction industry.

Paul Trigg, construction specialist and assistant head of risk underwriting at Euler Hermes, said:

“The outcome of the Brexit negotiations will be particularly key for construction, given its reliance on migrant labour and raw materials from overseas. Further rises in input costs due to more expensive recruitment and import costs will squeeze margins that are already under pressure, pushing up the strain on prompt payments across the supply chain and potentially the number of business failures in the industry.”

Do you feel optimistic about the future of the construction industry? Tell us in the comments!

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