'Building back with a bang' as construction sector recovery continues, but inflation rears head

Construction firms saw a “strong” increase in activity last month as pandemic restrictions continued to ease, according to a key report.

The closely monitored IHS Markit/Cips purchasing managers’ index (PMI) for the sector recorded a score of 61.6 in April, showing a marginal slow-down in growth from its March peak of 61.7. Any reading above 50 denotes growth.

The March figure had highlighted the strongest growth in output for six-and-a-half years, and analysts had been expecting a cooling in activity last month.

Civil engineering, commercial work and house building activity all continued strong recoveries during April.

Civil engineering, commercial work and house building activity all continued strong recoveries during April. Picture: Jane Barlow/PA Wire

Tim Moore, economics director at IHS Markit, said: “The UK construction sector is experiencing its strongest growth phase for six-and-a-half years, with the recovery now evenly balanced across the housebuilding, commercial and civil engineering categories.

“New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects.”

Gareth Belsham, director of property consultancy and surveying firm Naismiths, said: “The gas pedal is still stuck firmly to the floor. But the construction industry’s Lewis Hamilton-style acceleration now has an unwanted passenger – inflation.

“Input costs – which include materials and labour – are rising at their fastest pace since records began two and a half decades ago.

“Suppliers of key materials like steel and timber are struggling to keep up with surging demand and this is driving prices ever skyward.”

He added: “Well over half of the firms surveyed for this PMI data predict that demand will pick up even further over the next 12 months. Building is back with a bang.”

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