UK construction returns to growth despite delays and shortages

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
Builders work on a 7.8 million housing estate by construction company Seddon, creating 63 new homes on 3 March, in Burslem, England. Photo: Nathan Stirk/Getty Images
Builders work on a 7.8 million housing estate by construction company Seddon, creating 63 new homes on 3 March, in Burslem, England. Photo: Nathan Stirk/Getty Images

The UK's construction sector returned to growth last month, according to a closely watched private sector survey of activity.

Data company IHS Markit on Thursday said its survey of purchasing managers in the construction sector found "a solid return to growth in February after a setback at the start of 2021".

IHS Markit's purchasing managers index (PMI) came in at 53.3 for February. The index is measured on a scale of 0 to 100, with anything above 50 signalling growth and anything below meaning contraction.

Construction activity in the UK slumped over Christmas and New Year but recent data had pointed to early signs of a turnaround in the sector.

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Work on residential housing remained the major driver of growth in the sector, IHS Markit said, but there was a strong rebound in commercial work last month too.

"Survey respondents commented on contract awards for commercial building that had been delayed earlier in the pandemic and some reported a boost from infrastructure work related to major transport projects," the company said in a press notice.

"The successful vaccine rollout spurred contract awards on projects that had been delayed at an earlier stage of the pandemic," said Tim Moore, economics director at IHS Markit. "House building is still the engine of recovery for the construction sector, although there was a loss of momentum since January as adverse weather and longer wait times for materials contributed to some temporary delays on site."

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Optimism in the sector hit its highest level since 2015 but analysts warned that delays to deliveries and shortages of raw materials were hampering potential growth.

"Reports of delivery delays remain more widespread than at any time in the 20 years prior to the pandemic, reflecting a mixture of strong global demand for raw materials and shortages of international shipping availability," Moore said.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, which helped compile the survey, said: "Strong demand for products added pressure to already impaired supply chains as sellers battled with raw material shortages, and the costs of business rose at the fastest rate since August 2008."

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