Construction activity is continuing to grow in the UK. That’s according to the April S&P Global / CIPS UK Construction Purchasing Managers’ Index® (PMI), as reported by PCBToday, a Construction, Planning and Building Control portal.

Construction companies in the UK the survey shows continue to experience an increase in construction activity. Although the PMI survey shows that this expansion is unevenly distributed across the sector, there are definite signs of growth, the early green shoots of a recovery, but housebuilding is still depressed.

The supply problems post-Brexit and post-Covid in the building materials market are beginning to ease with building materials supplies reaching their highest level since September 2009. Prices have stabilised as building materials have become more readily available, and the transportation bottlenecks and delays have eased. The materials price inflation brought about by the Brexit / Covid shocks has reduced to its lowest level in the last two-and-a-half years.

The monthly releases for the S&P Global / CIPS UK Construction Purchasing Managers’ Index® (PMI®) provide an insight into construction production and the performance of the sector. The index is ‘based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies’.

The importance of PMI indicators

Construction activity indicators provide critical insights into the health of the broader economy, as an increased level of this activity gives an early sign of recovery, it plays such a key role in showing how the overall economy is performing perform.

Construction figures include residential, commercial, and industrial construction. Commercial and industrial building activity includes the construction of hotels, office buildings, schools, hospitals, and other institutional buildings. Residential activity includes new housing single family homes as well as multi-home buildings such as apartments and flats.

Construction spending accounts for around 5 per cent of the overall UK economy in any given year, as measured by gross domestic product (GDP). When businesses are investing in new construction, it typically indicates that economic growth is building and on the road to recovery. The converse is true of course and weak construction activity is troubling news for the economy.

These construction activity indicators are based on statistics gathered through monitoring hard data as building approvals, construction progress over a given period, overall construction spending, the state of the construction workers employment market, and even the number of buildings being demolished. All of these data points can give insights into the direction of the economy, though one month’s data has to be viewed with caution, until a definite trend can be established.