Large-scale projects drive construction growth in March

Civil engineering was the construction industry’s strongest performing sector according to the latest Markit/CIPS UK Construction PMI figures.

Overall, construction growth softened slightly in March with a  PMI reading of 52.2, down form February’s figure of 52.5 and still above the growth threshold of 50.0.

Growth was spurred by strong performances from the civil engineering and commercial sectors.

Civil engineering output was the fastest recorded so far in 2017 and was the strongest performing sub-sector in March.

The loss of momentum was largely due to the weakening performance of housebuilding, which has been attributed to the slowdown of the UK housing market.

The survey revealed high levels of optimism within the construction industry as fears over Brexit receded, with positivity at its highest recorded level since December 2015.

Nearly 50% of all respondents predicted a rise in business for the year ahead, with only 9% expecting to see a decrease. This, coupled with the resilient performance of the economy, was also reflected in an increase in new invitations to tender.

Construction costs remained high due to the increased cost of imported materials stemming from the weaker pound.

The overall rate of cost inflation, however, eased from January’s eight-and-half year peak.

Tim Moore, Senior Economist at IHS Markit said: “UK construction firms experienced a growth slowdown in March, with the loss of momentum centred on housebuilding. A weaker trend for residential work has been reported throughout 2017 so far, which provides an indication that the cooling UK housing market has started to act as a drag on the construction sector.

“Civil engineering projects were the construction sector’s main growth engine in March, driven by rising infrastructure spending and a strong pipeline of new work throughout the UK.

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