Near-term prospects remained relatively positive, as new work increased for the third month running amid reports of a boost to sales from improving domestic economic conditions. Supplier lead times meanwhile shortened to the greatest extent in 2024 so far, which survey respondents linked to rising materials availability and relatively soft demand for construction inputs.

At 53.0 in April, up from 50.2 in March, the headline S&P Global UK Construction PMI registered in positive territory for the second month running and signalled the strongest pace of expansion since February 2023.

Commercial building (index at 53.9) increased for the first time since August 2023 and was the fastest-growing area of construction activity in April. Survey respondents commented on rising workloads and a turnaround in customer demand, in part driven by refurbishment projects.

Civil engineering activity (index at 53.6) meanwhile expanded again in April and at the strongest pace for nine months. The latest survey signalled a setback for house building
activity (index at 47.6). April data pointed to a moderate fall in residential building work, although the rate of decline was the steepest since January. Construction companies again noted sluggish market conditions and the impact of elevated borrowing costs.

New business volumes increased for the third successive month in April, although the rate of expansion eased since March and was only modest. Those reporting higher new
order intakes typically cited improved client confidence, particularly in the commercial segment.

Despite sustained rises in output and new work, the latest survey pointed to another marginal reduction in employment numbers. Lower staffing levels were often linked to the non-replacement of voluntary leavers, due to cost pressures and the completion of major projects.

Demand for construction products and materials softened for the eighth consecutive month in April. Lower input buying was partly attributed to destocking. Supplier performance meanwhile improved at the fastest pace since December 2023.

Sub-contractor availability increased at a robust rate in April, despite a rise in usage for the first time in 2024 to date. Rates charged by sub-contractors increased at the strongest pace since August 2023.

Purchasing prices rose only modestly in April, with construction firms noting that suppliers had sought to pass on greater wage bills and transportation costs. However, the overall rate of cost inflation was only modest and well below the long-run survey average.

Finally, optimism regarding the year ahead business outlook edged up in April. Nearly half of the survey panel anticipate a rise in output during the next 12 months, while only 11% forecast a decline. Survey respondents mostly commented on improving sales enquiries and more positive signals for customer demand, alongside hopes of interest rate cuts in the latter half of 2024.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey, said: “The construction sector consolidated its recent return to growth in April, with total industry activity rising at the fastest pace for 14 months amid an ongoing recovery in order books. Demand was boosted by greater confidence regarding the broader UK economic outlook. Commercial construction outperformed in April and civil engineering also provided a solid contribution to overall growth.

“Lacklustre market conditions in the house building segment continued to weigh on activity. The latest survey pointed to the fastest reduction in residential building work since January, although the speed of the downturn remained much softer than in the second half of 2023.

“Hiring trends were subdued in April despite a recovery in workloads, which mirrored trends seen in other part of the UK economy, as construction firms sought to maintain a tight focus on costs against a backdrop of strong wage pressures. Purchasing prices nonetheless increased only modestly in April. An improved balance between supply and demand helped to contain overall input cost inflation, as suggested by the fastest improvement in vendor performance so far in 2024.

“Business activity expectations for the year ahead picked up slightly in April, supported by a sustained recovery in new orders, positive signals for sales pipelines, and anticipated interest rate cuts in the second half of 2024.”

Brian Smith, head of cost management at global infrastructure consultancy AECOM, warned that the outlook for the sector remains uncertain, with no increases in new work expected as interest rates remain high and this year’s election diverting attention from public sector delivery.

He said: “A second month at or above fifty and continued improvement since December demonstrates some resilience to the sector, despite the overall stuttering economy and poor weather.

“However, the outlook remains uncertain for the industry at large. We expect the new work volume trend to be flat or downwards this year, especially while interest rates remain elevated for private developers and the upcoming election diverts attention from public sector project delivery.

“Repair and maintenance work will remain a reliable source of revenue but filling order books with longer-term contracts remains a priority, as firms look to strengthen their pipeline of work and bolster their balance sheet.”

Michael Wynne, director of the sustainable housebuilder Q New Homes, added: “Housebuilders aren’t just late to the construction industry party. This data suggests they weren’t even invited.

“While activity is surging in both commercial building and infrastructure construction, residential work is stuck in a flat spin.

“Housebuilding activity in April contracted at the fastest rate since January, as many smaller developers - who rely heavily on loans to buy land and fund the building work - postponed their plans.

“Coupled with a planning system which is a hotchpotch at best, and hostile to developers at worst, the high cost of finance means far too many housing schemes are stuck on the drawing board.

“On the demand side, stubbornly high mortgage rates continue to make it hard for first-time buyers to afford a home. At this rate Britain won’t come close to building the homes it needs for years to come.

“However it’s not all doom and gloom. Nearly half of the builders surveyed predict that business will pick up over the next 12 months, encouraged by the prospect of falling interest rates and the possibility of a more pro-building Government after the election.”