Data released by S&P Global / CIPS showed that activity in the construction sector improved sharply in May, exceeding economists' forecasts, and reaching the highest level since May 2022 amid accelerating growth in new orders.
UK construction PMI rose to 54.7 points from 53.0 points in April. Economists had expected a decline to 52.5 points. An index value above 50 points indicates an expansion of activity in the sector. The index has been expanding for the third month in a row.
The report showed that for the first time since May 2022, all three monitored categories saw activity increase during the month as housing activity returned to growth. The sharpest increase in activity was seen in the commercial category where the rate of growth accelerated to a 2-year high. Meanwhile, civil engineering activity rose at a solid, but slightly softer pace. New orders rose again in May (for the 4th month in a row), while the growth rate was the strongest in a year. In particular, firms linked higher new orders to the winning of new contracts and the commencement of previously delayed projects. Employment also increased in May (for the first time in 5 months), while the growth rate was the highest since September 2023. A renewed increase in purchasing activity was also registered in May, again linked to improving workloads. The rise in input buying ended an eight-month sequence of decline. Meanwhile, companies noted only a marginal increase in input costs during May, with the rate of inflation the softest in the current 5-month sequence of rising input prices. The data also showed that business confidence in the construction sector rose to a 3-month high.