Construction output rises at fastest rate since June 2021, PMI report says

Construction activity rose in September at its fastest rate for more than three years, according to a key output index.

The S&P Global UK Construction Purchasing Mangers’ Index (PMI) showed a score of 57.2 in September, up from 53.6 in August.

It is the seventh successive month of growth in output. Any score above the 50 no change mark indicates growth.

The index, compiled from survey responses from 150 construction firms, showed civil engineering was the best-performing sub-sector with a score of 59. Survey respondents commented on a robust demand for renewable energy infrastructure and an uplift in work for major projects.

Commercial building rose by 55.2 while housebuilding scored 54.3.

S&P said the volume of new orders expanded at the fastest rate for two-and-half years, while input buying increased at its fastest rate for more than two years. However, input prices were at their steepest rate since May 2023.

Tim Moore, economics director at S&P Global Market Intelligence, said: “”A combination of lower interest rates, domestic economic stability and strong pipelines of infrastructure work have helped to boost order books in recent months. ”

“New project starts contributed to a moderate expansion of employment numbers and a faster rise in purchasing activity across the construction sector in September. “

Brian Smith, head of cost management at Aecom, said: “A seventh consecutive month of output growth is reflective of the surer footing the sector finds itself on, with the rate of inflation falling to more expected levels from the high rates seen over the last few years and developer confidence taking root since the spring.

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“The sector will be intent on finishing the year well – boosted by government intervention in the planning system as its NPPF consultation comes to a close. Infrastructure and energy were major focuses of the Labour Party Conference. However, it remains to be seen how much the Chancellor will be able to invest to stimulate the levels of renewal needed across the UK. The upcoming Budget will therefore set the tone for development activity in 2025 and beyond.”

Jordan Smith, technical director at Thomas & Adamson, described the increase in output as “encouraging”

He said: “The large rise in civil engineering and interest in renewable infrastructure, in particular – along with the boost to housebuilding – suggest the recovery is broadening out, and that the government’s commitments to investment are translating into real projects. It’s critical that this commitment is maintained, however, to meet the needs of the industry and avoid projects being paused or stuck in their infancy.”