UK Construction Activity Rebounds In February

(RTTNews) - The UK construction activity recovered at a robust pace in February as the rebound in commercial activity and a positive contribution from civil engineering were offset the housing market weakness, survey results from S&P Global showed Monday.

The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index climbed more-than-expected to 54.6 in February from 48.4 in January. The expected reading was 49.1. The score has exceeded the neutral 50.0 mark for the first time in three months. The reading also signaled the biggest growth in construction since May 2022.

Commercial construction activity grew the most among the three broad categories in February. Civil engineering also returned to growth in February though the rate of growth was moderate.

However, residential building work contracted for the third consecutive month. Respondents cited elevated interest rates and cutbacks to new house building projects as reasons for the housing market weakness.

Overall new work picked up in February reflecting the turnaround in demand for commercial projects. Forthcoming project starts contributed to a moderate upturn in purchasing activity.

The survey showed a slowdown in input price inflation as there was a better alignment of demand and supply in the construction sector. Purchase prices increased at the slowest pace since November 2020.

Business expectations for the year ahead improved further from the 31-month low in December 2022. Optimism among companies was the highest in a year.

The survey also showed a moderate increase in employment numbers in February. However, measures to reduce costs continued to hold back recruitment.

Data released last week showed the continuing weakness in the UK residential property market.

House prices declined 1.1 percent in February to mark the first annual fall since June 2020 and also the biggest fall in a decade, the Nationwide survey revealed.

The Bank of England data showed that mortgage approvals for house purchases declined for the fifth consecutive month in January.