A six-month slide in UK construction activity came to an end in March as the industry edged back into positive territory.
Civil engineering was the best-performing segment, according to the latest monthly S&P Global UK Construction Purchasing Managers’ Index (PMI) released this morning. Output levels increased at a marginal pace, with panel members citing increased work on infrastructure projects and resilient demand in the energy sector.
House building and commercial construction were both broadly unchanged last month. The stabilisation in residential work was the best performance in more than a year for housebuilders who have struggled amid a market downturn triggered by higher interest rates and the cost-of-living crisis.
READ MORE: UK interest rates frustration after Bank of England call
The headline reading for activity across all sub-sectors edged up from 49.7 in February to 50.2 in March, the highest since August last year. Any reading above 50.0 indicates an overall expansion of output.
Though modest, the improvement is encouraging and adds to evidence that the recession into which the UK fell at the end of last year may already be over.
The March UK Manufacturing PMI released earlier this week showed both production and new orders picking up following a prolonged period of contraction. The headline reading of 50.3 marked the first time in positive territory for the sector since July 2022.
On the other hand, growth in the UK's economically dominant services sector slowed during March amid fears of sticky inflationary pressures. The PMI reading of 53.1 undershot expectations and was down from February's 53.8, but remains in positive territory.
So what to make of it all? Well, it seems the UK could be in the fragile early stages of an economic recovery of sorts, but don't pull out the party poppers.
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The economy has been hobbled to near-stagnation levels for a number of years now, due in large part to a lack of long-term investment in the infrastructure and training needed to support healthy levels of productivity. Though it would be nice to think that a new ruling party at Westminster will have among its top priorities a plan to amend this, such a prolonged dereliction can't be rectified overnight.
Meaningful growth will therefore remain elusive. The best case scenario is a decidedly gradual recovery as lower inflation, falling interest rates, and tax cuts boost consumer spending to help feed the preeminent services sector.
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